Thursday, September 15, 2011

Business Ethics - Money or Customers and Netflix / Redbox

This month millions of Netflix subscribers are voting with their feet and walking away from the mail order dvd rental company.  And they should. (I did too!)

Netflix decided to raise their rates by 60% and give customers multiple options as to whether they wanted to receive dvds in the mail, use only live streaming or both.  Each one has different prices, where as before they were all under the same -one price fits all- deal.

So far over 600,000 people have cancelled their subscriptions.  Stocks have fallen by $40 a share.  They expect to lose over $1,000,000 this quarter, yet feel that it is the 'right way to go' for future growth.

Personally I was offended by the price changes, and the harrassing emails about dvd's that I had at home, and how they would make me purchase them if they did not receive them by a certain date - all because I cancelled the dvd portion and elected to go with streaming.  Of course, even though I made the change on my account weeks before their deadline, they sent a dvd that was on my list from before I made the change.

At a time when American unemployment is at an all time high and people are strapped financially, a cheap movie can be an excellent way to relax and unwind from the stress of the day.  And as Redbox raises their prices on DVD rentals nationwide in over 33,000 kiosks, it makes me wonder what their priorities are.

The purpose of a business is to make money.  Period.  If it is anything else you don't have a business, you have a charity.  Colleges and Banks are businesses, under the guise of being helpful and improving our lives, but remember, they have to pay for all of those pretty buildings one way and it is your money that does it!

So, everyone is willing to pay a price for an education, entertainment, and to have a secure place to keep our money.  But if your bank, college or bookstore raised all of their prices by 60% would you still shop there? I doubt it.

Imagine what would happen if Walmart raised it's prices overnight by 60%...  and Target stayed the same.  Walmart would keep a few loyal people, a few ignorant people who don't know how to track their own spending and would lose everyone else to Target.

In today's information society - people will go to where the information is, and where it is cheap.  That is why Youtube is such a big hit!  So, what does this all mean for Netflix? 

It will continue to lose customers to Redbox, Amazon, Hulu and other streaming companies.  And people will tell their friends.  And they will flock to where the information and entertainment is cheap.

What do you think?  Do you still have a Netflix account?  Sound off below!

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