FC: Who's your ideal Netflix customer?
RH: A customer who's traveling and forgets to rent a movie and watches no movies in a month [might be], because they haven’t cost us anything and they've paid us $9.99 or $17.99. On the other hand, a customer who's a very light user is not going to stay with us very long. It's not that there's something wrong, that they don't like you, it's just that they aren't watching any movies. That's the number one reason for customer churn. On the other extreme we've got users that are total movie hounds -- they're watching 15 movies a month -- and in some narrow sense, it would be better to get rid of them because you're losing money on them. But then, they stay with us a long time. So there is no best customer. We try to make the experience work for all of them and we try to balance that.
An interesting exercise is when we run short of titles. We try to always be in stock, but sometimes we're not. Say we've got 1,000 copies and there's 5,000 people who want a movie. So maybe somebody's already gotten a lot of value for their $20 or $18 or $9 because they've watched a lot of movies while other people have hardly watched that many movies this month, so they haven't gotten enough value yet. Our sense of fairness is that if we run short, it goes first to the people who haven't gotten the most value yet in order to create a fair and balanced experience for our customers.
Friday, November 18, 2005
Who's your ideal Netflix customer?
This is from a FastCompany interview with Reed Hastings, Netflix CEO:
Subscribe to:
Post Comments (Atom)
Interesting excerpt, thanks for posting it.
ReplyDeleteOne problem with this approach is that Netflix sends the DVDs in highest demand to those customers who tend to hang on to them for longer periods of time. So it will take longer for everyone who wants to see a popular film to get a shot at it.
Yes, that's bad.
ReplyDeleteThose users are also increasing the risk of loss or damage, by holding onto the discs for so long.
I'm sorry, but I just consider it whining the way people go on about so-called "throttling". No reasonable person considers it unfair unless they just want a license to abuse the service. Also, My queu is nearly maxed out and not from new releases. I subscribe to Netflix because I like movies and I like the convenience of having what I want come to me. Netflix is entitled to a profit and they are entitled to balance their service in order to run their business and provide an equitable level of service to their customers. If people think how they operate is just so damn unjust or dishonest, then cancel your service and go with a competitor. Otherwise, stop whining. Customers get what they paid for. Netflix limitations are reasonable, and no reasonable person goes off on these "throttling" whining jags. I just find it silly and immature. Thats my mini rant for the day.
ReplyDeleteAaron,
ReplyDeleteI'm glad to know you are reading my blog. Thank you for your sensible comments.
Becky