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Article from SFGate.

“For years, Netflix prospered from a love affair with its happy, loyal customers. Now, some of those customers want to break up over plans to raise subscription rates by as much as 60 percent.

“Dear Netflix: After three years, I’m sorry but it’s over,” wrote Adam Lundquist. “It’s been great, but it’s over. It’s not us, it’s you. Enjoy the bankruptcy.”

That was one of more than 8,000 comments posted on the company’s blog before the forum reached maximum capacity.

Currently, subscribers pay $9.99 per month for unlimited access to a library of movies and TV shows that can be viewed instantly over the Internet, plus one DVD at a time sent by mail. Subscribers who want high-definition Blu-ray discs, or two or more DVDs at a time, pay a few dollars more.

Starting Sept. 1, subscribers will be charged $15.98 per month to keep both the streaming and DVD-by-mail features. Or, they can choose one or the other for $7.99. For new subscribers, the rates took effect immediately.

Netflix says the increase is needed to support the DVD-by-mail side of the business while allowing the Los Gatos firm to continue strengthening its streaming video offerings, which are crucial to future growth both in the United States and internationally.

“We went from being an ultra-extremely good value to an extremely good value,” said Steve Swasey, Netflix vice president of corporate communications. “It’s $6 a month. It’s a latte.”

Anger goes viral

That’s not what faithful subscribers wanted to hear, and their anger exploded onto the Internet.

Netflix’s Facebook page had nearly 50,000 comments by Wednesday evening, many from customers who said they had already canceled their accounts and were jumping into the arms of a competitor like Amazon.com, Hulu or Redbox.

“How sad that after years of holding a subscription … and being a walking advertisement for Netflix, that we are stopping the use of your services,” posted Rebecca Kiel-Hollifield. “Greedy, greedy, greedy. Way to show your long-term customers, who helped pave the way for your extreme success with a higher price … Goodbye, Netflix, hello Redbox!”

“I am so ticked off. I have been a loyal member for 10 years, and feel like I was kicked to the curb. I hate wishing bad on anyone, but it would serve them right if they lost 60 percent of their customers to match the price increase,” wrote Robert Michel Lankford.

Many of the comments started as a sort of “Dear John” letter, and indeed, the term “#DearNetflix” became a top trending topic on Twitter.

“Dear Netflix,” wrote Carin Lane. “You were doing so well. I liked you. I even paid you when I wasn’t using your service much. You had it so good. Now you’ve gone and committed corporate suicide. Why? Do you not like me anymore? … I simply don’t understand this. You seemed smart, but this is such a dumb move. Well, I canceled this morning, like you apparently want us all to do. Bye!”

Some created new Facebook pages pushing a mass cancellation of Netflix accounts on Aug. 31, although a similar call against Facebook over privacy problems last year hardly caused a ripple in the social network’s march to 750 million users.

Swasey said Netflix was not surprised by the backlash, but noted the critical comments came from just a fraction of the firm’s 23 million subscribers and are “not representative of the majority.”

It’s not a charity

And not all comments were critical of Netflix. “They are a business, not a charity,” wrote Tyler Loman. “If you can’t afford it then maybe you should re-evaluate if you could even afford the old price.”

Mike Kaltschnee, who for the past seven years has run an independent Netflix news blog called HackingNetflix.com, said the company mishandled the way the price change was announced, letting the blogosphere take control of the story.

The response came because “people have invested a lot of energy in recommending the company,” Kaltschnee said. “I don’t think a lot of people are going to quit.”

Indeed, of the more than 7,500 HackingNetflix readers who responded to a poll, 33.9 percent said they will quit Netflix, but 30.9 percent said they will go for the streaming-only plan; 20.2 will sign up for the combination option; and 10.4 percent favor the DVD-only subscription.

Wall Street investors gave a big thumbs-up. Netflix stock rose $7.46 to close at $298.73 after hitting an intraday high of $304.79 on the Nasdaq Stock Market.

Analyst Tony Wible of Janney Capital Markets said the new subscription rates are fair because the former rates were “irrational.” He said the new rates are needed to make the business more sustainable, especially as Netflix deals with higher streaming licensing fees and other looming costs.

But he said Netflix should have called the change a price increase instead of trying to pass it off as an improvement in service, which it wasn’t. “People are smart enough to see through that,” he said.”

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