Brandon Muramatsu

So long Netflix, thanks for the memories

So long Netflix, and thanks for the memories

I received this in email yesterday, coinciding with Netflix’s change in rates.

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Netflix Raises Rates and Unbundles Services

Source: Brandon / Netflix

Netflix Raises Rates and Unbundles Services

It got me to thinking, should I pay them $2 more a month for the same service I receive now, should I change plans to DVD-only or stream only or keep the current 4-DVD+Streaming plan at $26.99 a month, or should I cancel the subscription?

A couple years ago I analyzed my Netflix watching habits through October 2008 (using the Netflix History Analyzer). My conclusion at the time was that Netflix was still worthwhile, though I probably should have cancelled my subscription in 2007. What would the analysis show now?

What’s happened since then?

  • I’ve continued to watch fewer and fewer DVDs or streamed movies/TV shows. But the TV shows I have watched via Netflix were not available elsewhere in anything approaching the timeframe that I watched them (Lie to Me–Season 1 and Spartacus Blood and Sand).
  • My grandfathered rate was finally adjusted to the current rate for 4 movies, but I got streaming included (probably bundled with it, ditto with Blu-Ray). I probably should have re-evaluated and cancelled at that rate change.
  • Netflix announced a significant change to their rate structure on July 12, 2011 and my rental rate will be going up further–with no noticeable change in the availability of streamed movies.

So does it make sense to continue with Netflix?

Looking at the data, if I just look from the point in time when I published the post forward (April 2009), here are the results:

Your results:

  • You’ve rented 23 DVDs + 21 equivalents via streaming over 36 months from March 25, 2008 to March 01, 2011.
  • Your plan costs $23.99/month so you’ve paid $863.64 total.
  • Your average price per rental was approximately $37.55 $19.12 each.
  • Average rental costs elsewhere are $4.99 each (not including late fees).
  • You’ve overpaid approximately $748.87 $644.08 over that time period or $20.80 $17.89 per month.

Here’s some more about your renting habits…

  • You kept each rental for around 149 days on average.
  • The longest you kept a single DVD was 633 days.
  • You rented about 1 DVDs each month.
  • You’re not taking full advantage of your current plan. You could be renting 26 DVDs each month.

I used $4.99 for the cost comparison–that’s the amount of a single HD rental via iTunes. If I used the SD rates at iTunes or Amazon Instant Video at $3.99, it would have been a bigger savings.

And even if I bought the movies at an average price of $20 each I would have spent approximately $880, or the same amount as I spent through Netflix. Buying the movies would have been a wash with the DVD rental. In the case of the TV shows, I would have had to have waited longer for the shows to be available on DVD for purchase. But it’s a pretty high price to pay for that convenience.

Hardly seems worth it when compared to the alternates for a straight replacement.

Ok, what if I had the DVD-only plan at $7.99 and watched everything on DVDs? Total cost = $287.64, overpayment $68.08 for 44 DVD-equivalents. What if I did stream-only plan at $7.99 (keeping in mind most of the streaming movies were only available at the time via Netflix)? Total cost = $287.64, overpayment $157.90 for 26 = 21 + 5 (movies that I could have streamed from Netflix). So the DVD-only plan might be worth it for the convenience, but I’m finding that I watch fewer and fewer movies on DVD/Blu-Ray. It’s still not cost effective to do it.

So what do I do?

I think most signs say that I should cancel. It’s been a great 11 (that’s eleven!) years but it just doesn’t make economic sense to continue my subscription.

  • Netflix was a disruptive innovation in 1999. They’re still trying to do good things, but the change in economics (actually this happened awhile ago) combined with a change in my habits, means this isn’t a good thing to continue.
  • The timing and manner of the announcement and change in rate plans and the hullabaloo it raised on CNN, TechCrunch, Engadget the Netflix blog and Facebook page caused me to rethink my subscription. My decision to cancel is not strictly speaking because of the new rates, it’s fallout from the manner of the announcement.
  • Netflix’s streaming library is not nearly as extensive as it needs to be to make going stream-only viable. The studios and content producers are holding back, trying to eek out too much money probably. And I’m not renting as many DVDs/Blu-Rays as I used to.
  • There are significant alternatives now, that certainly didn’t exist in 1999 and were nascent in 2009. Amazon Instant Video (purchase or rent), iTunes (purchase or rent in SD or HD, though I’d probably purchase most in HD), Hulu (for the last couple episodes of current TV), Hulu+ (for more TV content, though not nearly as much as would make the service a no-brainer for me), TV websites that stream much of their current episodes.
  • Heck, purchase or a la carte rental, for my current habits, is probably a better alternative to a subscription at even $7.99 a month. Right now the cancellation is either a savings of $23.99 a month, or it’s a credit to be used toward rentals or purchase. Either way it’s making economic sense.

So long Netflix, thanks for the fish memories.

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