Red Envelope Madness!

Friday, February 04, 2005

Netflix "throttling" makes the evening news in San Jose, CA

KGO-TV (broadcast channel 7) of San Francisco, Oakland, and San Jose investigated customer's complaints of "throttling" on their news feature 7 On Your Side with reporter Michael Finney.

Netflix responded to these complaints in an e-mail to 7 On Your Side, stating...

"Our goal is to provide a high level of customer service and operate a financially sound business. Depending on inventory and number of shipments to be processed, heavy users of our service might experience a slight delay in receiving movies."
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This is similar to, but more explicit than, the message Manuel, who blogs on My Netflix Journal, had posted that he received from Netflix customer service which confirms that Netflix is deliberately giving lower priority to shipping discs from your #1 queue position, or lower priority for one-day turnaround, if you are a high-volume renter. This is known as "throttling" in the Blogosphere.

Here's what they said:
Dear Manuel,

Thanks for your message.

In determining priority for shipping and inventory allocation, we give priority to those members who receive the fewest DVDs through our service. As a result, those members who receive the most movies may experience next-day shipping and receive movies lower in their Queue more often than our other members. By prioritizing in this way, we help assure a balanced experience for all our members. Those that rent a lot of movies get a great value and those with lighter viewing habits are able to count on our service to meet their limited needs.

If you have any further questions or concerns, please feel free to contact us.

Thanks,
*******,
Netflix Customer Service

This raises the issue of limited versus "unlimited". What are the legal ramifications of using that word? Can a business use the word "unlimited" in their advertising, if they are going to give higher priority service to lower-volume users? Is making someone go to the end of the line, the same thing as limiting their access to the service?

11 Comments:

  • At 2/04/2005 6:18 PM, Blogger mookdapimp said…

    I had Michael Moore's THE AWFUL TRUTH SEASON ONE DISC 2 at the top of my queue. Netflix received a disc back from me on Thurs, 2/3. They sent me an e-mail to me today, 2/4, saying the new disc has been shipped and I will receive it on or about Wednesday, 2/9! I get my discs from New Brunswick, NJ and usually they come in one day (ex. shipped Mon, receive Tue). WTF? That's five days! The disc was listed as NOW status, as well.

    welcome2theterrordome.blogspot.com

     
  • At 2/04/2005 9:06 PM, Blogger manuel said…

    I've been watching the boards for a while now and one poster says Netflix is safe because they are using the FTC's definition of "unlimited." Something to do with what an average person would rent. A frustrated Netflix customer e-mailed me that he called 3 different lawyers and all refused to take up his case because of the online agreement Netflix has. Netflix has a good legal defense but their public image is blemished (in my opinion).

    I really don't complain to Netflix about my service. It's too difficult. It's easier to expose them on the Internet.

    Thanks for running the story. You're able to put the good and the bad on your blog.

     
  • At 2/05/2005 1:24 PM, Anonymous Anonymous said…

    mookdapimp, I'm guessing that the Michael Moore disc was shipped to you from a different shipping center then the one you usually use - sometimes this is necessary if they don't have the disc you want at your regular center. This kind of thing happens to me every once in awhile, usually with titles which are outside the "mainstream" (last one was a film called Spring, Summer, Fall, Winter ... and Spring).

     
  • At 2/06/2005 11:58 AM, Anonymous Anonymous said…

    The question about whether it's unlimited or not. Is certainly a good one. What netflix is saying is because of inventory and number of shipments to be processed, heavy users have to wait for their turn. I can understand inventory is a valid point, because they can't keep copies of new releases for everyone.

    But, what about the "number of shipments to be processed"? That amounts to saying that you have inventory in the distribution center, but, you can't ship them because you have too many customers to ship to? Then it suggests that NF has more customers than it can handle. Or less than needed amount of resources to serve the customers it promised to serve! Well .. why did you sign up more people than you can serve in the first place then?

    What do you call a company who has signs up more subscribers than it can serve?

    Disclaimer: I am a NF fan, but, lately I can't ignore the questionable ethics of the company.

     
  • At 2/06/2005 6:56 PM, Blogger Aaron said…

    I suspect this will be an unpopular point of view, but I think that the outrage of some users over this issue is unwarranted. To me, heavy users like the one in the news story doing 33 movies a month has no reason to complain. He is getting the move value Netflix said it would deliver, even if he is not getting as many movies as he was before. Users like that would take 60 or seventy movies if they could ( I don't know what plan he is on) but the reality is is that like everything in life, there are limits. That guys outrage is because he can't go on sort of abusing and using the system in a kind of gluttonous way. His use comes at a cost to other users and to the bottom line of Netflix. Its a business, and customers who happen to live one day's mailing from a distribution center and want to abuse the service can't be allowed to wreck NF's business because they want to be PO'd about reasonable limitations on their service.. People talking about suing over the word "unlimited". That is greed talking, not somebody who has been damaged or had a promise made to them and not kept. To me these complaints are coming from people who are behaving in a greedy manner and getting mad when they find out that there are limits. Sitting around analyzing NF service so that we can then use what we learn as some sort of bludgeon on the company we say we love so much is just wrong. So called "throttling" is a reasonable company response to the presence of customers who if permitted to, would happily bleed the service dry. And while I can be honest and admit that I might behave this way if I were permitted, I would not have the gall to get an attitude about it when someone puts the brakes on such behavior. Thats my two cents

     
  • At 2/06/2005 6:56 PM, Blogger Aaron said…

    I suspect this will be an unpopular point of view, but I think that the outrage of some users over this issue is unwarranted. To me, heavy users like the one in the news story doing 33 movies a month has no reason to complain. He is getting the move value Netflix said it would deliver, even if he is not getting as many movies as he was before. Users like that would take 60 or seventy movies if they could ( I don't know what plan he is on) but the reality is is that like everything in life, there are limits. That guys outrage is because he can't go on sort of abusing and using the system in a kind of gluttonous way. His use comes at a cost to other users and to the bottom line of Netflix. Its a business, and customers who happen to live one day's mailing from a distribution center and want to abuse the service can't be allowed to wreck NF's business because they want to be PO'd about reasonable limitations on their service.. People talking about suing over the word "unlimited". That is greed talking, not somebody who has been damaged or had a promise made to them and not kept. To me these complaints are coming from people who are behaving in a greedy manner and getting mad when they find out that there are limits. Sitting around analyzing NF service so that we can then use what we learn as some sort of bludgeon on the company we say we love so much is just wrong. So called "throttling" is a reasonable company response to the presence of customers who if permitted to, would happily bleed the service dry. And while I can be honest and admit that I might behave this way if I were permitted, I would not have the gall to get an attitude about it when someone puts the brakes on such behavior. Thats my two cents

     
  • At 2/07/2005 12:10 AM, Anonymous Anonymous said…

    well. if they have dvds in dc and not sending them because it they can't process so much shipments they have some optimizing to do. The way to handle volume is design better process invest more in R&D until they can handle the volume. *That* would be their *competitive* advantage. Last I saw, they have people putting dvds on the conveyer. You can't serve that way to millions of customers. If they are trying save postage, there are better ways to do it. Just ask the subscribers that "if possible send multiple dvds in a single envelope, that will save us a buck or two". I am sure many will happily oblige to keep their beloved company in sound footing. They can also do the same while sending the dvds. It just strikes me that punishing customers for using them well/throttling/delaying shipments _deliberately_ is the worst thing they can do.

     
  • At 2/07/2005 2:32 PM, Anonymous Anonymous said…

    As I understand it, the delays come from the fact that Netflix does not have enough employees to send out new movies for all returns on certain days of the week. If they did, then there would not be enough work for those same employees on the other days of the week. What with the fierce price competition with BB and WalMart, there just isn't enough margin in this business to keep workers less than fully utilized.

    Given that as a starting point, which returns should be turned around first from the busy days? Netflix has made the obvious call any business would make - service your most profitable customers first. I don't understand why anyone is shocked by this. If you've ever had to standby for a flight, you know that the 100K flyers and full-fare payers are more likely to get on than the guy who got a deal from Priceline.

     
  • At 2/07/2005 5:11 PM, Blogger a boring person said…

    I guess they weren't a Netflix member before they many distribution centers. I was and it was much worse then. It was still called "Unimited" even though the USPS was the limiting factor.

    Everyone has a right to whine. Netflix is still a great deal. You have a choice. Pay more money, get more movies, or go somewhere else.

    Since noone is any better than Netflix, all they can do is whine. WAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA.

    I think he should get a life.

     
  • At 2/08/2005 10:43 PM, Anonymous Anonymous said…

    I agree that the whining is a bit much from those who denied throttling existed and now see a Netflix disclaimer changed a few weeks ago to admit it.

    Slashdot's did test on this almost two years ago where they showed they screwed new customers.

    I really worry netflix is getting tarred with a reputation as unethical. I am not a heavy renter but my service has gone to heck

     
  • At 2/13/2005 10:39 AM, Blogger robostock said…

    Aaron, I understand your business point of view. If a NF member wishes to have 33+ or so movies a month then he should be able to and not get throttled.

    Is it abuse? No, I see it as a person getting their money's worth and more.

    I have friends who NF members and they get maybe 3 - 6 a month. I was one of those heavy users getting 25+ a month, now I'm down to 12.

    I agree that you that it is fair to spread out the new titles to ones who are not heavy users, but what about the lesser demand titles that I request? It's available, but NF will delay the shipping of it because I'm a heavy user.

    Maybe I'm wrong but prior to NF throtling me, I was singing their praise. I've had 5 people sign up to their service. Now, I'm going to discontinue NF and they will soon follow. I've always thought that happy members made more sense than trying to get newbies through marketing.

    NF wont miss me but the continued negativity through members like me will effect their bottom line more than if they just kept us happy.

     

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