Netflix’s Big OOPS– didn’t these guys take Psych 101?

Topline takeway for this post: Netflix has screwed up, turning unconsidered background choices into front-of-mind considerations. They don’t understand how pleasure and satisfaction work.

I’m on vacation and somewhat unplugged, but I was still connected enought to receive a surprising email from Netflix yesterday saying that if I want to retain both unlimited streaming and one disk out at a time, then my price will jump from $9.99 per month to $15.98 per month– and that this will happen by September 1st.

Thin-slicing report: my first thought was, “huh, guess it’s time to cancel Netflix.”

(Side note: the inevitable social media death spiral has already begun, but that’s not what I’m talking about here.)

Whomever made this call at Netflix HQ doesn’t understand how locally unsatisfying but globally satisfying the current Netflix product is.

Even though I probably only borrow a dozen titles per year in disk form — and those disks become a Tivo-guilt-like homework assignment — my satisfaction index for those choices is moderate if unscrutinized. These are things I know I want to see to a sufficient extent that I’ll actually forego other options in order to have Netflix send me the disk. Netflix is so low-pressure compared to the other video rental services it is driving out of business (no late fees, etc.) that I don’t pay attention to how much of the $120 per year is wasted or not optimized– a real set it and forget it service. And the unlimited free streaming on top of that makes me even less likely to ponder the value.

So even though no local choice is a slam dunk — the way going to see “Cars 2” with my kids this week is likely to be an eventful and memorable outing — my global level of satisfaction with the service is acceptable.

Likewise, my endless Netflix instant-streaming queue is composed of things I vaguely want to see but haven’t gotten around to yet. “Huh, they’ve got ‘Hot Tub Time Machine,’ already… okaaaaay.” Most of what I watch on Netflix I watch alone, and so the choice of what to watch is quite arbitrary and mood driven. There is no killer content on Netflix — nothing I can’t get elsewhere if I really want to see it — just an amazing range of good-enough content for vegetating on the couch after a long day. I don’t do a cost-benefit analysis because I still think of the streaming as a freebie on top of the disk-rental agreement.

Until now.

Now, Netflix has forced me to think critically, and that’s never a good idea with a customer. Here’s a sample of my internal monologue:

Is $7.99 per month is a good enough price for unlimited Netflix streaming by itself. What about Hulu Plus? Golly, I’m already spending a ton on Comcast and they have free and fee VOD… do I really need Netflix? What about Amazon Prime? I already have an account there.  Should I spend the $94 I’m about to spend on Netflix streaming on a Roku box to hook Prime up to the big screen in the living room?

And the same is true for the disks: for $120 I can buy most of what I want, use VOD via Comcast or Vudu or Xbox/Zune, or look more carefully at the offerings at my local library.

In Barry Schwartz’s remarkable 2003 book The Paradox of Choice: Why More is Less, he articulates that the problem of internet plenitude is that for every choice we do make the opportunity costs of the choices we don’t make sucks away our satisfaction away from the lucky thing chosen.

The current Netlix service — the one going away in the fall that combines one disk with unlimited streaming –neatly jumps over the Paradox of Choice because the opportunity costs of each choice are ameliorated by a different sort of plenitude. If I don’t like the disk, I can stream.  If I don’t like the stream, then what about that disk lying on my desk?

Each service compensated for the faults of the other, but — I think — neither is worth paying for itself alone when there are so many alternatives.

Right now, I’m paying monthly or annual service charges for:

1. Comcast Cable with Premium Channels
2. Amazon Prime
3. Netflix
4. Hulu Plus
5. Xbox Live Gold

Something’s gotta give.  Until that email yesterday I wouldn’t have imagined that Netflix would be on the list of likely evictees.

Now it is.