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Business Research Ethics/WK2/351

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The controversy was mostly focused on the company’s unethical process in regards to the price rise of the rentals and online video streaming, without any prior notice.
A major controversy was initiated by the largest internet based movie provider company, when the company triggered a massive change in pricing as well as in its distribution policy. The company focused on separating the process of distribution of movies from the online streaming processes and the delivery of movies through the mail in red envelopes.
Apart from all this, the company also focused on changing the pricing policy for its product offering and introduced a pricing policy which provided less amount of advantage to Netflix’s subscribed consumers. The company introduced the process of charging the customers separately for distribution of movies online as well as through the physical mail processes, thereby changing its policy of charging consumers on a flat rate for availing both the processes. This resulted in a whopping 60% rise of the product prices from a fixed rate of around $10 on a monthly basis (Cohan, 2012)
Since Netflix is an internet based company providing rentals as well as online movies and TV shows to customers and consumers located in the US, the subscribed consumers of Netflix who were located in the US were the parties who took the maximum hit due to this sudden and unexpected price rise by the company.
Most of the consumers viewed the price rise for the company’s offerings, highly unethical in nature. The consumers believed that the company gained competitive advantage by offering products at low prices, thereby eradicating competition. The consumers have developed the feeling of getting cheated since their options of availing of video rentals have got reduced significantly.
The consumers retaliated by the process of venting their anger in various