Netflix Gives DVD Watchers a Surprising Gift -- No Strings Attached


NetFlixNetflix (NFLX) wants to thank you for your loyalty.

The video rental giant is offering existing subscribers on its DVD plans an extra disc this month.

"Thank you for being a Netflix member with a DVD subscription," reads an email that has been going out to customers in recent days. "As a gesture of thanks this holiday season, we'd like to offer you a free bonus DVD rental to supplement your DVD subscription."

There's no catch to this "special holiday bonus" from the beleaguered flick flicker. Folks aren't being upgraded to costlier plans. This isn't a bait and switch. It's an honest-to-goodness free disc rental, though folks will have to return enough DVDs -- essentially the freebie and one more -- to get the next disc in their queues.

Apologizing One Disc at a Time

It's easy to see why Netflix is in a giving mood.

The company has been backpedaling for months. After a poorly received price hike of as much as 60% on many of its subscribers, the Qwikster fiasco that was eventually reversed, and watching helmsman Reed Hastings bubble up to the top of many "Worst CEO of 2011" lists, the fallen dot-com darling has some serious fences to mend.

Netflix shed 800,000 subscribers in its latest quarter, and the outflows may very well continue this quarter. Anything that the company can do to encourage its members to stick around these days is huge.

To DVD or Not to DVD

There is no "special holiday bonus" for streaming-only customers. It is the company's DVD customers, after all, who were the ones hit with the pricing move and served their walking papers with the original Qwikster announcement.

Despite all of the marketing emphasis on Netflix's streaming service, there are still plenty of customers counting on a steady flow of optical discs. Netflix had 13.9 million DVD-based customers at the end of September.

Some of them have downgraded to cheaper plans with fewer discs. Some are also likely considering switching to Coinstar's (CSTR) Redbox or Dish Network's (DISH) Blockbuster to feed their disc-based rental needs.
A free DVD rental by mail won't be enough to turn Netflix's fortunes around, but at least it's a public admission that the company realizes that it has some bad will to overcome.

Netflix is trying -- and that's a start.

Longtime Motley Fool contributor Rick Munarriz does own shares in Netflix. Motley Fool newsletter services have recommended buying shares of Netflix and Coinstar.

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This might seem like a nice gesture with no strings, but Netflix has inadvertently erased the benefit with the small type. It states that "You will then need to return 2 DVDs to receive the next DVD in your queue." If you have a DVD on the way back when you redeem the coupon, they will ship the bonus DVD, they then receive your return, and you will not receive another DVD in your queue until the bonus is returned. In essence, it just becomes the next rental and there is no benefit.

January 03 2012 at 7:16 PM Report abuse rate up rate down Reply

I tried to purchase a Blu-Ray/streaming gift subscription for my brother for Xmas only to learn that Netflix hadn't updated its site to offer DVD/Blu-Ray rental gifts (it explicitly said you could only purchase "streaming only" memberships as gifts. Calling their customer service number got me nowhere. All the rep could say was, "Sorry, we weren't prepared for this." Not prepared for potentially millions of dollars in revenue (and thousands of potential new members)?! What is wrong with this company? No wonder they are among the most hated retailers in the world. I have been a long-time subscriber because I love the service they offer, but if they don't get on the ball they're going to suffer the same fate as all of the major video chains. Perhaps now is the time for Blockbuster to stage a major comeback.

December 26 2011 at 3:50 PM Report abuse rate up rate down Reply

better gift would be role back in prices...

December 26 2011 at 3:44 PM Report abuse rate up rate down Reply

As I have a streaming only subscription I am ineligible to receive any extras from the company. I would value the service much more if they would eliminate the DVD entirely and stream all their titles. The company is on thin ice and needs to continue to appease all members not just the hard copy subscribers.

December 26 2011 at 3:38 PM Report abuse rate up rate down Reply
David Amaya

I have a Netflix subscription and stream, but to get 'new' movies while they are still NEW I have a mom&Pop rental store membership!

Just because I love the convienence of 'Flix, doesn;t mean using the redbox is out!! I use all three at least 9 movies a week some weeks!!

I hope Netflix learned their lesson, and I hope they keep their promice to offer games like Gamefly does otherwise...

December 26 2011 at 3:15 PM Report abuse rate up rate down Reply

At the rate that I watch movies, Netflix is still the cheapest with the most extensive library around. If you want mainstream-they have it as do the others, but if you want off the grid of mainstream, Netflix is still Number One bar none.

December 26 2011 at 2:12 PM Report abuse rate up rate down Reply

Ditch Hastings and I'll come back!

December 26 2011 at 1:55 PM Report abuse rate up rate down Reply
Crystal L.

I pay about $26 a month to get unlimited streaming and 3 discs at a time and I love the service!!!

I watch my movies that day and send them all back the same day if I have time or the next day...Luckily, the closest facility to me is Nashville which ALWAYS receives my discs the next day and sends me out new ones that day...on that basis I can get about 6-9 movies a week---at least 24 movies a month! Plus, that doesn't even include all the instant streaming shows and movies I have in my queue...currently watching Chappelle's Show as we speak on Netflix :)

If I used Redbox, that would be $31 dollars a month for 24 movies! I wasn't crazy about the price hike, but I think what I am getting now far outweighs the slight price increase ($4) it cost me!

December 26 2011 at 1:36 PM Report abuse rate up rate down Reply

I've never had a problem with Netflix and have subscribed for years. I didn't get an email (unless I just overlooked it) and got an extra DVD a couple of weeks ago. I checked my account to make sure nothing was changed. It was a nice treat!

December 26 2011 at 1:35 PM Report abuse rate up rate down Reply

After canceling my Netflix subscription, they keep sending me emails to "Come back for only $7.99 a month!"

...Why would I come back and pay the same amount I was before when you still stream the same crap? I would pay $20 a month for Netflix if only they streamed movies worth watching.

December 26 2011 at 1:33 PM Report abuse rate up rate down Reply