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About 16% Of Netflix Subs To Bail: Magid Survey

Netflix's pricing-change fumble may be even worse than Wall Street fears, with 16% of current customers saying they're planning to drop the company's streaming or DVD plans, according to a survey by Frank N. Magid Associates.

The research firm's survey found that 9% of current subscriber said they will cancel their service because of the recent pricing change while 7% said they'll cancel because they're dissatisfied with the streaming service and for other reasons.

In addition to the 16% of Netflix subscribers likely to churn, another 14% said they are seriously considering canceling, Magid said.

Magid conducted the survey of more than 700 Netflix subscribers and over 350 non-subscribers the week of Aug. 22, 2011, the week prior to Netflix's price change that went into effect for existing customers Sept. 1.

Netflix this summer announced it would eliminate bundled DVD-and-streaming service, forcing customers to pay for two separate services. The company said on Sept. 15 that it expects to lose about 600,000 U.S. customers for the third quarter of 2011 because of the change.

This week Netflix said it will completely separate the DVD-by-mail service and market it under a different brand, Qwikster, while CEO Reed Hastings issued a mea culpa to customers apologizing for how the company communicated the new pricing structure.

"A major reason that many consumers are not happy with their Netflix service is due to the quality of the content selection in the streaming service," Magid Advisors president Mike Vorhaus said. "Netflix will need to improve the breadth and timeliness of their streaming content to re-build major consumer momentum."

The Magid survey also found that nearly 30% of Netflix users said they make more use of Coinstar's Redbox, which provides DVD vending machines nationwide, because of the Netflix pricing plan changes.

The survey was not commissioned by a client and the report will be sold as syndicated research, according to a Magid spokeswoman.