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Survey: Netflix price increases could spark notable user revolt

Netflix rolled the dice two weeks ago, announcing a significant change – and price increase – to its members. Now, it looks like a lot of those members may be planning to cut their ties with the service and embrace the competition. Netflix

A new survey from Wedbush Securities of 1,098 people finds that 22 percent of Netflix subscribers say they plan to discontinue their subscription with the company, and substitute its content with a combination of services, including Redbox, Hulu, Amazon’s streaming video initiative and traditional cable pay-per-view.

Among the other expected results of the price hike, according to the survey:

* A 78% increase in $7.99/month streaming-only plan subscriptions 

• A 73% decrease in combination plan subscriptions

• 20% of subscribers will switch to unlimited DVDs by mail plans

Among those who say they plan to drop Netflix, the majority – 57 percent – say they plan to give their business to Redbox. Hulu is the next biggest potential beneficiary at 37 percent, followed by cable providers at 33 percent.

In other words, one of the leaders of the cord cutting movement could be driving users back to cable.

Of course, this is just a survey – and people often threaten to stop doing business with a company and fail to follow through. Should the results reflect actual behavior, however, Netflix would see a 21 percent decrease in its annual revenue run rate, says Wedbush.

But even Wedbush believes a fair number of people answered the questions purely from an emotional point of view.

“We expect defections at perhaps half the rate indicated by the survey, and expect no more than half of the 5.5 million current subscribers who said they would discontinue Netflix service to actually do so,” said Wedbush analyst Michael Pachter. “With that said, we can only surmise the reason for the price increase, given that it is unlikely to generate higher overall revenues for Netflix, accompanied by a loss of goodwill for a company that has enjoyed one of the highest customer satisfaction ratings over the last decade.”

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