Customers Leave Neflix After Price Hike, Stock Drops
DAVID GREENE, Host:
It's clear not as many people are sending their money to Netflix. The video entertainment company expected to lose customers when it raised its subscription prices this summer. But yesterday Netflix stock hit its lowest price of the year. NPR's Karen Grigsby Bates has more.
KAREN GRIGSBY BATES: Customers used to consider Netflix a great bargain. For as little as $7.99 a month they could choose to enjoy movies and television via mailed DVDs or instantly, via Internet streaming. For 9.99 they could do both. But this month the price went up - 60 percent. Jay Obittore is co-director of advocacy group Communities United for Broadband. The Greensboro, North Carolina resident says this wasn't his first price hike.
JAY OBITTORE: A year earlier I got a dollar increase and I sucked that up. I said, all right, cost of doing business, no big deal, a dollar more a month, $12 more a year.
GRIGSBY BATES: But the latest increase was too much. Obittore cancelled his Netflix subscription and predicts others will do the same.
OBITTORE: As more and more people are starting to pinch pennies here as the recession continues, more and more people are going to look at what can I cut out of my bill...
...month, $12 more a year.
KAREN GRISBY BATES: But the latest increase was too much. Obittore cancelled his Netflix subscription and predicts others will do the same
OBITTORE: As more and more people are attempting to pinch pennies here. As the recession continues, more and more people are going to look at what can I cut out of my bills? And Netflix is going to be one of the first things to go.
GRIGSBY BATES: So far, Netflix says one million subscriptions have been cancelled.
As another blow, STARZ, one of Netflix's biggest content providers, decided to end their relationship. Come February, a lot of current STARZ movies will be off the Netflix menu.
Karen Grigsby Bates, NPR News.
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