How Much Does Consumer Outrage Cost Companies?

A look at 4 tech boo-boos and their respective costs

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angry man 000008485817XSmall 80 e1287168719421 How Much Does Consumer Outrage Cost Companies?The Internet has, if nothing else, democratized rage to an impressive degree. Even the smallest voice becomes a booming fount of vitriol once it has access to Twitter and a caps lock button. Where businesses found their products judged by the way consumers spent in the past, now the court of public Internet opinion judges goods and services long before they even hit the market.

According to Mashable‘s Chris Taylor, social networks like the aforementioned Twitter are fueling consumer outrage, giving people a platform to air their discontent where they had none before. He points to the recent hike in Netflix (NASDAQ:NFLX) subscription fees as a prime example of how loud consumer rage can get. Netflix’s Facebook page was slammed with more than 79,000 comments after the announcement of the price increase. An additional 4,000 comments were posted on its official blog, where the announcement was first made. That’s a lot of angry customers, right?

Not that many, actually, in the grand scheme of things. Netflix has more than 25 million subscribers. Even if every one of those enraged comments were made by individual subscribers, they still represent a miniscule fraction of Netflix’s actual business. So, how much do these rage-fueled fiascos actually cost businesses?

Netflix Subscription Hike

Changes to Netflix’s subscription fees won’t take effect until September, so it will be impossible to determine just how big an impact the hike will have on the company’s bottom line until the end of the fourth quarter. Research firm The Diffusion Group has a decent idea, though. A survey conducted by the group in July estimates that Netflix might lose 2.5 million subscribers over the next quarter. Assuming those 2.5 million subscribers paid for the $10-per-month streaming and by-mail DVD subscription that’s being eliminated, Netflix stands to lose $300 million in annual subscription revenue.


Article printed from InvestorPlace Media, http://investorplace.com/2011/08/consumer-outrage-internet-company-costs/.

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