Tuesday, July 19, 2011

Theatre, Netflix, or TV? Netflix price hike brings to light moviegoer habits

By Sarah Sluis

Yesterday, I mentioned my occupation as a writer for a film magazine to my hair stylist. "Yeah, between cable and Netflix I don't really go to the movies anymore," he said. He's not alone. 30% of Americans don't see a single movie in a year. The remaining 70% includes two groups. A minority sees movies regularly, once a week or a few times a month. The majority sees a select few movies a year that seem Netflix worth the expense for the experience. Movies like Harry Potter, Twilight, and Avatar make the cut for these people. Others prefer to see action-filled flicks in theatres and save talky ones for home. I recently recommended Midnight in Paris to a friend. "No, I don't see those kinds of movies in theatres," he said. He prefers seeing movies like X-Men: First Class, which benefit most from monster screens and surround sound, on the big screen. Movies lost their monopoly long ago, back when television first made its way into American homes. How much of a threat is Netflix really to movie theatres? Nada.

The only company to go out of business since Netflix has been Blockbuster. That's the clearest indicator that consumers consider Netflix a replacement for movie rentals, not going to the movies or catching them on TV. Netflix has also increased the "pie," opening up entirely different patterns of viewing. Never has it been so easy to sit down and watch an entire series of a television show. It's also the subscription method of choice for young adults, many of whom can't be bothered to set up a cable connection, much less pay $100 a month for the privilege, in their transient lives. Everyone I know who doesn't have a television watches programs online with Hulu or Netflix. So much for reducing screen time by not having a TV.

What will be most interesting about Netflix is to see how consumers react to the 60% price hike announced last week. Before, streaming was just an add-on to the DVD delivery service, which could be had for $9.99 a month (one DVD + streaming). Now consumers will have to purchase a $7.99 streaming plan and/or a $7.99 DVD rental plan, a big increase for Netflix's budget-minded customers. That makes the calculus of choosing a plan a bit more difficult. Personally, I've enjoyed streaming now and then when nothing else looks good, but the content and selection isn't strong enough to justify that cost, given how little the content I stream is worth (we're talking the movies that used to be in the 99 cents rental section). Perhaps that's why Netflix decided to outbid HBO for an original series back in March. I bet the $7.99 streaming fee will soon have an added bonus: original content.

As you can see by reading through the comments on Netflix's blog, a lot of their customers are very unhappy about the price hike. People are mentioning Red Box, Blockbuster, Amazon Prime, and Hulu as competitors who can provide them movies for a lower price. Not one person said, "Well, I might as well go to the movies now." Maybe that's because a month of Netflix is still less than the price of a night at the movies for two.

Netflix is part of the changing landscape of the post-movie theatre market. But so many of these changes are just variations on existing ways Americans already find and watch movies. Netflix is like a video rental store. Streaming is like on demand or even selecting what's best from the TV guide. Movie downloads are just buying a digital DVD. And going to the movies is always going to be a more immersive experience than watching a movie at home.

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