Red Envelope Madness!

Thursday, February 09, 2006

Netflix sends frequent renters to the back of DVD line

Manuel Villanueva realizes he has been getting a pretty good deal since he signed up for Netflix Inc.'s online DVD rental service 2.5 years ago, but he still feels shortchanged.

That's because the $17.99 monthly fee that he pays to rent up to three DVDs at a time would amount to an even bigger bargain if the company didn't penalize him for returning his movies so quickly.

Netflix typically sends about 13 movies per month to Villanueva's home in Warren, Mich. -- down from the 18 to 22 DVDs he once received before the company's automated system identified him as a heavy renter and began delaying his shipments to protect its profits.

The same Netflix formula also shoves Villanueva to the back of the line for the most-wanted DVDs, so the service can send those popular flicks to new subscribers and infrequent renters.
Read more


  • At 2/10/2006 4:08 PM, Blogger Drivinguy said…

    I belong to Blockbuster and have had no problems renting movies and recieving them in a timely manner. I usually get about 12 movies a month. Plus I get 2 free rentals a month at their store. I am not with BB But I read the Netflix story and thought I would list my experience wit BlockBuster.

  • At 2/10/2006 4:09 PM, Blogger Drivinguy said…

    I belong to Blockbuster and have had no problems renting movies and recieving them in a timely manner. I usually get about 12 movies a month. Plus I get 2 free rentals a month at their store. I am not an employ with BB But I read the Netflix story and thought I would list my experience wit BlockBuster.

  • At 2/10/2006 4:31 PM, Blogger EmJayEeGee said…

    Hi---I belonged to Netflix & I have no cable so I was renting/watching a ton of movies....I was getting a one day turn around on delivery & returning. It was great!!!! I was a walking adertisement for them....until....all of a sudden, it was taking 2-3 days?!?!?! I called & talked w/ a customer service person (which I had to dig to find the # & then wait on hold for a LONG time)...she denied the practice. I eventually unsubscribed in principal. this story made me say "I TOLD YOU SO!!!" to more than one friend!!!

  • At 2/10/2006 4:49 PM, Blogger coffeeZ said…

    This comment has been removed by a blog administrator.

  • At 2/10/2006 4:54 PM, Blogger coffeeZ said…

    What ever they need to do to stay in business, and keep membership prices down. With the amount of postage they pay, heavy customers could easily cost their business tons of money. Then, they would have to raise membership prices or (worst case) shut down. Even with the automated system I'm paying 1/3 to 1/2 less than at Show Time or Block Buster. Sucks to get slowed down but they are still much better than the video store option.

  • At 2/10/2006 5:00 PM, Blogger RFC said…

    I've been with Netflix for about 4 months now because I am an avid movie fan. I am homebound because of a head injury several years ago. I have the 4 at a time plan and at first they were coming like every other day. I noticed about 5 weeks into the membership that there was a SIGNIFICANT slowdown and movies I had put in my queue before they were released when released were suddenly "very long wait" listed. I am now going to try the Blockbuster thing since I am sorely disappointed in Netflix. I've had several films that were so worn they would not play or skipped portions of the movies. No more and as a member of fan clubs for certain types of films including an IFC affiliation I am going to send out boycott requests to more then 20,000 fellow members. We'll see if THAT makes a bit of a difference to their bottom line and slimy business practices not to mention false advertising and outright lies.

  • At 2/10/2006 5:25 PM, Blogger Autiger2k2 said…

    this has been my experience with Netflix .. it takes them 4 to 5 days to check my movies in then takes 3 to 4 days for me to receive movies .. I have been with them for 2 years .. and I wouldn't mind paying a little extra, if I got the movies back in a timely manner( heck we were paying 23 bucks last year at one point ), they are forgetting us long time subscribers.
    Also I am finding that new releases are not available to me for a month or so later. they lowered my rate from 17.99 to 16.99 ... but if i can only get 6 movies a month why bother. I am trying out Blockbuster now. hope they care about customers more so than netflix. maybe this way of renting is a dying fad. Hope not

    the following is the response i got from netflix

    Thanks for your message.

    Movies are sent by first class mail and usually arrive within 1 to 3 days, but some movies may take longer than 4 days to arrive because of U.S. postal delays.

    Please be assured that Netflix delivery delays are very uncommon. If you're experiencing repeated delays getting DVDs, we would suggest trying another shipping address, such as a P.O. box or work address.

    At present our goal is to ship you the DVDs listed highest in your queue. Also, we currently try to ship you DVDs from the distribution center closest to you so that you get movies quickly. In certain instances, your top choice may not be available to you from your closest distribution center, which can sometimes cause a small delay.

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

    Netflix Customer Service .

  • At 2/10/2006 5:26 PM, Blogger ChrisCAD said…

    I have been with Netflix for over 3 years. I love the service. So what if you have to wait an extra day or so the get your movies. If you wanted to watch a movie that bad then get off of your lazy butt and go down to the corner and get the movie. Besides if you have enough time to watch that many movies a month you need a job. You are paying 18 bucks a month to have movies shipped to your house. Mellow out. find a mate or a pet and go out into the fresh air.

  • At 2/10/2006 5:39 PM, Blogger spiritius3 said…

    I was a potential subscriber despite knowing someone who was dissatisfied with the product when they first registered with Netflix. I have a very good job that is mentally and physically demanding. I don't have a social life so I buy and rent movies. I was looking forward to trying Netflix because I wanted to eliminate the stop from work to my home. Your article helped me reach a decision that taking short cuts are not really beneficial. Maybe I'll see you at the video store.

  • At 2/10/2006 5:40 PM, Blogger afptr said…

    This following comment made by Netflix rep is stupid:

    "Hastings said the company has no specified limit on rentals, but "'unlimited' doesn't mean you should expect to get 10,000 a month."

    Stupid comment like this enrages me. How in the hell can you get 10,000 movies in a month, huh?!?!? Can you count? Can you count how many days is it in a month???? It's ~30, right? Even if somehow (which is also impossible), USPS can ship the DVDs back and forth within one day and you can watch the 3 DVDs as soon as you get it, you'd still get at **MOST** 90 DVDs a month. How is 10,000 is in the picture??? DUH!!!

    All we (frequent renters) want is one day turnaround. So that means:
    Day 1: Netflix ships 3 DVDs
    Day 2: Customer get the 3 DVDs and watch them.
    Day 3: Customer sends back 3 DVDs
    Day 4: Netflix got the 3 DVDs and sends another 3 DVDs in the queue.

    So it's a 4-day cycle for each 3 DVDs. So in a month, best case, it would 22 DVDs in a month. Account for USPS slop for once or twice, I can settle with 18. IS THAT TOO MUCH TOO ASK??? HUH?? NOW THEY WANT TO THROTTLE THAT????!!!


  • At 2/10/2006 6:15 PM, Blogger seth3rd said…

    This act of “throttling” made me wonder about my own account w/ Netflix. I have not been religiously watching how fast my orders have been coming, but I have noticed a few times, when I am watching to see which movies are coming next, that when I place two DVD’s in the post at the same time the two DVD’s appear on my account as having arrived at the different times. Thus I get my movies sent to me w/ a day or two apart. I don’t think that this day or two hold would be an issue for me, but to be told unlimited deliveries, and then hear about “throttling” because they want to keep their stock shares rise does disappoint me. I am also disturbed w/ ChrisCAD’s response. I read his blog as being just negative and rude to the other people that wish to post their comments and ideas in an open and non-personal judgement site. His blog was inconsiderate of RFC.; I don’t think of someone that is homebound because of a head injury as being lazy.

  • At 2/10/2006 6:30 PM, Blogger whip netflix into shape said…

    We were having the same problems with netflix as has been described - we complained and made it clear that we would drop them if they didnt provide faster service - they have responded with a better turn around rate, but i suspect they will start to drop off again if we dont stay on their asses. Its frustrating to be "blacklisted" by a company you are paying for a service. I recomend to everyone that we dont spare the whip and keep netflix on its toes. If your service drops off - COMPLAIN! COMPLAIN! COMPLAIN! - and remind them that they are starting to have competition.

  • At 2/10/2006 6:36 PM, Blogger phed_crazy said…

    Hey, if you're tired of Netflix and cancel. GO OUT WITH A BANG. Just start breaking the DVDs after you watch them. Send them back to Netflix without logging it to your account. When they ask why all your discs are being returned broken, just tell them it happened somewhere in transit. Tell them the same things they tell you. Really, I got two cracked DVD's this week and I am fed up. You have to sit around and wait another 4 days to get a replacement. So since they pretty much treat you like it's your fault you received a broken DVD, you might as well fit their profile of you ENTIRELY. If you're tired of Netflix DISCRIMINATING you by your amount of viewing, then everyone needs to CANCEL out. Without the customers, they are not a company. The reason they treat their customers like morons is because the customers LET THEM. So if you're mad at them, do something about it. Just start cracking them. Even if a tiny percentage of pissed of customers did that, Netflix would go under LIKE THAT!! Your words and hate mails to them do not bother them. Hurt them where they feel it. THE WALLET!!!

  • At 2/10/2006 7:16 PM, Blogger lulu said…

    I believe there are millions of unhappy customers that have noticed a sharp increase in the turnaround time; not to mention those (my case also) who are receiving cracked and scratched DVD.

    This is a classic example of a company that WAS innovative and USED TO love its customers while it was a start up. This company used to be the darling of all marketing books and case studies. Unfortunately, one day, the young and small company turned into a greedy monster that has forgotten that WE THE CUSTOMERS have built this company.

    I am working now for a case study for my marketing students on how you can destroy a brand while trying to change the business model and to punish the loyal customers.

    I urge you all to make you complaints heard. Netflix does not deserve our business.

  • At 2/10/2006 7:17 PM, Blogger phed_crazy said…

    One more thing. Netflix always blamed the POST OFFICE for the delay in arrivals. Everyone who received similar responses needs to contact the USPS about this SLANDER. Do not stop there. When the USPS is directly blamed for something FALSE while trying to make a profit from those statements, it becomes another legal issue. Netflix knowingly hid the truth when asked directly. My emails to them specifically asked for the possible reasons of my drastic change in customer service and they only suggested the USPS being incompetant. They only mentioned that so I would maintain my membership. That is directly misleading and they will soon be facing more serious charges against their company. So even you non-movie watching Netflix customers will also witness a change in your accounts as well. Enjoy Netflix!

  • At 2/10/2006 7:22 PM, Blogger phed_crazy said…

    You mentioned that everyone needs to make their voices heard. Please list some important targets for everyone to voice to. I only know of pjeople like the BBB, and the establishments directly affected due to Netflix. There's newspapers and congressmen. There's the local News networks/affiliations who will jump on FACTS such as these. If you have any other targets for voice, PLEASE share them. I am currently doing what I can. The more knowledge I have, the better I can direct my words. Thank You.

  • At 2/10/2006 7:50 PM, Blogger Ronzander said…

    To All NetFlix Users?

    Wanna get back at Netflix in a way that really means something to them?

    Drop Netflix and join Blockbuster! Hell, for the same $17.99 a month you get three movies out at once, and one free in store rental of any movie or game every week. This includes all of the new releases as well!

    Tell me that Netflix can match that? And if you want to save money, for $14.99 you get the same three movies out at once, but only get two free in-store movie or game rentals.

    If you watch your movies fast and do more than the nine (9) movies a month it takes to trigger the NETFLIX "NET-FIX, then use your wallet to complain folks. I use Blockbuster and they ship fast, and what I want.

    I have never waited on movie, and you shouldn't have to get cheated because someone misguessed their business model, and is now trying to leverage your movie watching to maximize their profit. Think that NETFLIX cares about your outrage? Doubtful at best folks!

  • At 2/10/2006 7:54 PM, Blogger Ronzander said…

    Oh yeah. I forgot that Blockbuster also gives you perks to. Free DVDs, free ice cream, free candy, and more. What the hell are all you paying NETFLIX for? Perhaps they have better commercials, but Blockbuster offers a far better deal! And NO, I don't work for Blockbuster or own stock)

  • At 2/10/2006 8:01 PM, Blogger bishopxx said…

    I have been with Netflix for over 2 years now. I pay the 29.99 a month which is 5 at a time. I go through about 20 a month. If I ship them out on Monday, Netflix gets them on Tuesday but will wait until Wednesday or Thursday to mail them out. They tell me the delay is because they are trying to get the first movie on my list from another distributing center. I have told that doesn't sound right to me, to make me happy they should send the closest one they have on the list that they have in stock. All of the new releases I don't get until about 3-4 weeks after they have been out. I put them on my list 2-3 months in advance and as soon as they are not saved they go to the top because I check it on Monday nights since new movies are available Tuesdays. I am thinking of switching to Blockbuster if they are going to take that long. I mean I spend 30 bucks a month and I am getting them in a timely manner. When they said 1 day delivery, that is what they should have meant...

  • At 2/10/2006 9:20 PM, Blogger dvdphile said…

    I feel better for just having read this blog. I've been a netflix member, 5-at-a-time, for over 2 years (hi, thanx for the juice and cookie :o). I sensed the throttling but didn't care so much. I return all of my DVDs the next morning, always.

    I dropped netflix because it's now impossible to receive a new release movie. I reserve them when they are just advertised before reaching a theater, like I always have, and now I won't receive a new release until it is no longer a new release. I signed up for blockbuster and received my 3 new release choices the next day.

    It makes good business sense. They were losing money on me for a couple years and now I've finally moved on. I'm sure I'll be back at some point (under a new identity, of course) as I prefer netflix web service to blockbuster's.

    Thanks for having this blog :o)

  • At 2/10/2006 9:31 PM, Blogger lulu said…


    Word-of-Mouth is a powerful tool. Tell what happening with Netflix (let us call it NETFLIT) to all you friends, family, colleagues, and anyone you know and meet. Those people are going to spread the word. Believe me, they do deserve it!


  • At 2/10/2006 9:52 PM, Blogger The Tart said…

    Many THANKS to everyone who posted.
    I will switch to Blockbuster ASAP!
    I just recently was THROTTLED by Netflix and didn't know it until I read about it today on the news~ Yahoo.

    What a sad movies have slowed down and my friend's too & he is retired older gentleman...neither of us knew about Netflix THROTTLE tactics.

    Again, thanks for all the good advice and therapy.

    Best of luck to all....tell your friends,
    & Netflix, if you are listening...change your practices and be upfront about your tactics.

    Thanks all!

  • At 2/10/2006 10:24 PM, Blogger blocker2 said…

    I just recently cancelled my Blockbuster Online membership for just the same thing. I didn't know there was a name for it until I read this article. I think these services should come clean and be honest about the limits they set (secretly) on renting.

  • At 2/11/2006 1:07 AM, Blogger Maria Palma said…

    I think that this is something that Netflix should have thought of before they launched the company. I think it's very unfair to treat your "best" customers this way.

    ~Maria Palma

  • At 2/11/2006 2:33 AM, Blogger tffc said…

    I just checked my account on Netflix for the last six months. I have averaged 11 DVDs per month (about 3 per week). I am on the 3 at a time plan. For me, that is 1.64 per DVD. Not bad. Pretty good. However.... I mostly get TV show DVDs. I get new releases through rental stores. Most days, my returns take a day (always mail inside the post office). Too many days, my returns take close to a week. I hate when they send me a DVD from somewhere else in the country... send and return takes days. Unless I return on Friday, I have no shot at getting new releases. Yes, Netflix is a good deal... But like everything else... It ain't that good. Netflix lies about 1 day turnaround. They definitely manage accounts (how many you get). I am ready to quit (saw all the TV shows I needed to see). If I was a new member, expecting to see 3 new movies a week... I would be angry in a hurry.

  • At 2/11/2006 4:03 AM, Blogger DANIEL said…

    Ok, I'm a moderate Netflix user and haven't noticed that much throttling...a little sometimes, not much though.

    What worries me more, though, is that there seems to be a lot of "Hurray for Blockbuster" people posting here that don't seem completely honest. I'm a skeptical guy and I'm really wondering whether some of these people here are actually part of some viral marketing campaign by Blockbuster.

  • At 2/11/2006 6:57 AM, Blogger Unbelievable said…

    This comment has been removed by a blog administrator.

  • At 2/11/2006 7:01 AM, Blogger Unbelievable said…

    I wrote a few weeks back asking about slower service. Making the point that as a long term customer, I thought their turnaround time was getting diluted by all the new people they were bringing in for 9.99 a month. Here is the response I got.

    Hello Stacy,

    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 that (i) the shipment of their next available DVDs occurs at least one business day following return of their previously viewed movie, (ii) delivery takes longer, as the shipments may not be processed from their local distribution center and (iii) they 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.

    Netflix Customer Service

    I wrote back and asked them how they "balanced" the fact that all of us that joined basically the week they started were getting bad service while new people that didn't even really use the service were getting exactly what they needed. Got the last sentence as again as a response...

  • At 2/11/2006 7:31 AM, Blogger ED said…

    The netflix practice of throttling - is unethical and poor business practice not to mention possibly illegal. In most states it is illegal to give any preferential service for a consumer product or service that offers the same product for the same price by the same retailer. It is called discrimination and false misrepresentation of services offered. It would be the same if a restaurant offers an all you can eat buffet, gives your first portion fast, but makes you wait on a long line and gives smaller portions for subsequent servings.
    What you can do: Write to the Chamber of Commerce in Wash., better business bureau, and if your disabled contact the ADA (Americans with disabilities advocates), contact your local press newspapers, radio and TV news stations - this is a new hot topic and bad press is the last thing a business wants for it's shares and reputation.
    By the way I have notices a new delay tactic, in the past when Netflix received a DVD first thing in the AM say 8 or 9am they used to mail out the same day usually by noon. Now not only do they mail out the DVD's several days later, they are mailing them around 6 to 7pm in the evening which is after the hours USPS can possibly deliver by the next day. what ever the USPS delivery would take it takes an extra day by mailing out the dvd's late in the afternoon or evening.
    Complain to netflix often let them know you are unhappy with the service.

  • At 2/11/2006 10:00 AM, Blogger Tom In Texas said…

    I am another person who, after joining about 2 years ago has noticed a significant change in service, for the worse. I live in Houston, and with a Netflix service center near the downtown area, I found a post office that would get the returned discs to Netflix by the next day. Netflix would then turn around a rental and I would get it the following day. That has changed, and I've seen the unsatisfied comments as well as the law suit that came about because of it. I agree that people should get the unlimited turnaround on DVD rentals from the service that advertises that that is what customers will get. I also believe that a "mail-order" service should do business on a Saturday, since the mail system is in full working force on every Saturday(bar holidays).I too am a very frequent renter, and have notice what must be the "throttling" effect. It is not right. Netflix advertised this service for what it was not long ago. Now, here comes the greed. They want to keep more profits is what it's coming down to. As a business grows, and Netflix is growing at a substantial rate, it will become more profitable. But it appears Netflix only wants to grow in the size of it's wallet. Very sad.

  • At 2/11/2006 10:39 AM, Blogger Tina said…

    I am another person who has noticed a significant change in service. I've been looking into the Blockbuster deal and I think we're going to switch. It doesn't appear that they use the "throttling" practice and you get two in-store DVDs.

    We've been Netflix subscribers for about two and half years and I've told all my friends about how wonderful the service is. You can guarantee that I will pass on the info about their "throttling" practice.

  • At 2/11/2006 10:51 AM, Blogger Maria M. said…

    I hate Netflix! When I increased my number of movies per month to 8 (and I was home for two weeks from work,) every newer movie on my list said "long delay." I thought it was possibly because they didn't plan on their membership increasing so soon. I dropped them!

  • At 2/11/2006 11:12 AM, Blogger Don said…

    I had never heard of throttling when I quit Netflix last year for the very reason being discussed. I started out getting real quick turn-around but the longer I went the slower they got. I watch a movie the night I get it and mail it back the next morning. I'm not the least bit ashamed to admit that I am trying to maximize my rental relationship. They are the ones that say 'unlimited'. The only way to fight back is to quit. But, you know, I lost. I lose the movies and they lose nothing. Some unsuspecting renter comes along after I quit and joins. Netflix knows that and could care less who dislikes throttling. They have no incentive, what-so-ever for improving the service. It's numbers, and they are in their favor. Well, I don't get the movies, but they don't get MY money! I can live without them.

  • At 2/11/2006 1:02 PM, Blogger bcvbcv said…

    Two comments:

    1) I have used both Netflix and Blockbuster. I liked Blockbuster's instore coupons but decided to go with Netflix because it has a better selection of unusual movies (old ones, foreign films, PBS etc.)

    2) I get throttled by Netflix by a day or two all the time. When I see a delay in the "We've Received ___ " or in shipping a new one out I go to the website and report the last movie missing. Not sure what good it does but I hope it gets some attention and jogs the next movie free.

  • At 2/11/2006 3:25 PM, Blogger bloggerun said…

    It seems to me that Netflix has done what so many other companies do, and that is taking the short term view of their business. If Netflix can’t be open and honest in its dealing with customers then inevitably customers will find alternative suppliers. Over the long run that will give Netflix a declining membership and profits as well. Now that process may take a while, even years, but eventually Netflix will become a memory instead of remaining the best service available.

    Okay, enough philosophy. I too have been throttled while at the 5 at a time level. I complained and will do so every time it happens. I have also offered suggestions to Netflix to help them lower costs, but they treat those the same as a complaint and offer up boilerplate responses. I’m going to decrease my plan to cover those movies I can’t find at Blockbuster. And so it begins.

    I also mail back two at a time occasionally, and save the extra return envelope. When I get a movie from some place other than my local distributor I use one of the extra envelopes to return it locally. This cuts the extra day or two off the return. I use the envelope from distant distributors to return movies just before I go on vacation – I wouldn’t want to waste the postage paid envelope.

    Finally, I wonder about the possibility of a class action law suit. If Netflix is limiting my movies can they really keep advertising “Unlimited” service?

  • At 2/12/2006 12:25 AM, Blogger Autiger2k2 said…

    has anyone used Intelliflix? i saw a comparsion chart to the 3 companies. seems like its like netflix when it first started out, but they rent games also.

  • At 2/12/2006 2:27 AM, Blogger StingrayJG said…

    I've been a netflix subscriber for close to 2 yrs. now (3 disc plan) and have been generally very happy with the service. According to my account history, I'm returning between 8-12 discs a month to them, so I guess I fall into their category of a frequent-renter that they're losing money on. I did not know i was being throttled until I read the recent press about it. Now, some things I did not think too much of at the time make more sense to me. When "Carlito's Way: Rise To Power" was about to come out, I cleared my entire queue and had it in my queue all by itself and I only had one dvd at home, the other two slots were empty and just waiting for the next dvd to become ready to ship. I figured that would make me a shoe-in for getting it first. The Tuesday that the movie was to become available, it immediately went to 'very long wait', even though I only had one movie listed as at-home. I waited close to two months before it finally shipped. I am now currently experiencing the same problem with "40 y.o. virgin" and "two for the money" Both have said very long wait since the day they were released and i had them in my queue weeks before release. And I always make sure that when a hot release is coming out, I always have an empty slot in my 3-at-home list for the new release to slip right into. This is no longer a given due to throttling. I have also noticed recently that some dvd's are taking an extra day to ship once in a while but not too frequently. I can understand what Netflix is doing from a strictly dollars-and-cents standpoint. They obviously make more profit on a 3-4 returns per month household than they do from me. But from a customer service standpoint, I think it's a pretty crummy thing to do. This is not a business model that would work in too many other areas. Car rental companies reward frequent renters, airlines reward frequent fliers, I have a subway sub-club card that gets me free food for being a frequent customer. You can see where I'm going with this. Then here we have netflix PENALIZING me for using them frequently. Like I said, it makes sense, and it doesn't. I haven't decided to jump ship to Blockbuster or anything like that yet, but I'm closely monitoring Netflix's handling of the situation and if they continue to cause me further grief, or actually increase the throttling to the point where it aggravates me too much more, they'll leave me with no choice.

  • At 2/12/2006 12:57 PM, Blogger Frank D said…

    Don't think Blockbuster is any different. I tried them first and service was great for a while and then I noticed a big slow down in service. It actually took a week for a movie to be reported as returned. I cancelled after that and joined Netflix. Well guess what? The same thing has happened. Service was great for a couple of months then all of a sudden the big slow down has hit. Just sent in a message to customer service to complain. I do have a question, if you slow down on renting do you then get removed as a heavy renter and go back to quick service?

  • At 2/12/2006 5:56 PM, Blogger Realist6 said…

    It seems as though most of the recent posters are confused when discussing what this process is really about. The fact that you rent 20 movies a month compared to someone who may only rent 5 doesn't make you a "better customer" in the way that filling out the dozen subs on your subway card does. On your subway card, you pay for each one of those subs, making it in their interest to keep you coming back for more. For a service like Netflix, you are essentially an equal customer to a new subscriber or one who gets fewer movies. I figure it costs the company $0.90-$1.00 to send a movie (postage, packing materials, employees and operating costs). It is more in their interests to do what they can to retain their low volume customers (who are more profitable) than their high volume ones. Of course they should pander to them of they want to stay in business. If you are a low volume customer, you'd be pissed if you could never get the movies you wanted because "movie-hogs" who pay the same subscription fee as you are monopolizing all of their copies of those movies. Additionally, they know that the people who rent close to 20 movies a month are still getting a ridiculously good deal and would be silly to cancel their membership. While the company should be more upfront and honest about their policies, their business model of throttling to give low volume customers priority is brilliant and insures that everyone subscribing is getting a really good deal out of their subscriptions. And you shouldn't fool yourself to think that if you cancel your subscription of 15-20 movies a month that you are really hurting their profit margin because they make most of their profit from the customers who rent 4-8 movies a month, get great service, and top priority to new releases.

  • At 2/12/2006 6:52 PM, Blogger StingrayJG said…

    Speaking of confused,I think realist6 may have missed the message of my prior post. First of all, I'm not "confused" at all about what netflix is doing, as noted in my previous quote, "I can understand what Netflix is doing from a strictly dollars-and-cents standpoint. They obviously make more profit on a 3-4 returns per month household than they do from me." I used subway, airlines and car rentals as examples of industries where netflix's strategy would definitely NOT work, as noted in my previous quote, "This is not a business model that would work in too many other areas." But thank you anyway for repeating those points. And as far as being labeled a movie-hog, I think that the infrequent, recreational movie renters deserve that label more than I or other frequent renters do. (Here comes the science.) If a new movie gets released on a Tuesday, I receive it on a Wednesday afternoon, watch it Wednesday night, flip it back in the mailbox Thursday, and netflix gets it back either Friday or Monday. It ended up off of netflix's shelves approx. 4-7 days. If the recreational 2-4 rentals-a-month person gets the same movie sent on a tuesday, receives it wednesday, hangs onto it til the weekend (when most occasional movie watchers view them), flips it back in the mail that monday or tuesday, and netflix gets their movie back say, Tuesday or wednesday at the earliest, it's off their shelves 8-10 or possibly more days versus my 4-7. This seems to make the so-called movie-hogs not really hogs at all in my opinion. If you determine a movie hog by how long you keep the movie off the shelf and unable to be rented by someone else, it seems that the recreational renters are more deserving of the label. Of course that's just my opinion and not everyone will agree with that. I have no doubt at all that I'm still getting a tremendous deal from netflix even in spite of the aggravation of the occasional throttling. I've gone into blockbuster plenty of times in the past and not had a movie available. It stinks but you live with it. And what's not to say that Blockbuster may unveil a similar throttling plan, some other posters here think they may already be doing something like it. And the previous poster is exactly right, throttling is a brilliant strategy. (I'm sure all the recreational renters would agree.) If someone like me cancelled my membership, whether in protest or for any other reason, they would actually profit from me doing that, since in their assessment, they're losing money on me. Oh well. We can beat this issue to death. The bottom line is, netflix is still a good deal for me, I'm sticking with them for now, and I'm definitely not confused. I may not necessarily like what they're doing, but I'm crystal clear on the how and why.

  • At 2/12/2006 10:44 PM, Blogger Aaron said…

    I think complaining about throttling is wack. The simple fact is that as a business matter, Netflix has to manage heavy renters. Resenting that fact is stupid. Before you go getting on the BB wagon, know that they will have to manage that issue too if their service achieves longevity.

    But the fact is that even if you are being throttled, you are still getting a good value on a straight money basis. If thats all that matters to you and its not enough then quit. But making all these statements about Netflix is evil and they are breaking their promises is junvenile and further, its OLD people. Quit if it bothers you that bad and the only interest for you is how good a bargain you are getting. In my opinion, Netflix is tops in service and value. I'll remain a customer, and I am a heavy renter and do experience so called "throttling". I just don't bitch about it all day.

  • At 2/13/2006 6:39 AM, Blogger bcvbcv said…

    Of course we all can understand why Netflix throttles. Doesn't take an MBA. Yes, the heavy users are getting a good deal even with the throttling. But isn't it a valid complaint that Netflix is in effect cheating people by getting subscribers by offering an "unlimited" deal, then limiting the flow?

    There are many retail offers which are losers for the sellers when consumers take full advantage of them. That's why that type of offer is such an effective marketing technique. The sellers absorb the losses from a few buyers as a cost in the overall marketing scheme. Big rebates are a good example. Seems to me that Netflix IS dealing dishonestly here.

  • At 2/13/2006 11:32 AM, Blogger Scrapbdazzled said…

    So drop your service level membership from 5 out to less. We don't have to provide a better profit margin with less service.

    I can have a lower membership with both Netflix and Blockbuster and still win. Play the game and leverage their throttling tactics against them.

  • At 2/13/2006 1:59 PM, Blogger Aaron said…

    "But isn't it a valid complaint that Netflix is in effect cheating people by getting subscribers by offering an "unlimited" deal, then limiting the flow?"

    No, its not a valid complaint. Netflix's approach to managing heavy renters is reasonable. Heavy renters still receive a high level of service, even if they are throttled. Further, EVERY dvd by mail service has to manage this issue, and do it in the same way. Its a fact of the business. The complaining that goes on about it is simply the whining of people who just want to have their way and damn the company that provides the service's bottom line. We're entitled to good service for our money. The vast majority of us get that. They are entitled to make a reasonable profit and they do. If the value proposition is not satisfactory for the individual customer, they are free to cancel and go with a competitor or do without. But that is the correct response if you don't like NFX. CANCEL. But casting completely unfounded aspersions on the company and publicly dogging it as though they cheat, lie and steal from customers is completely without foundation.

  • At 2/13/2006 2:26 PM, Blogger Jr said…

    For everyone that is jumping ship to Blockbuster. This is from Blockbuster's Terms and conditions page. Looks like they are doing the same thing.

    Selection and Allocation of Product. BLOCKBUSTER Online will automatically ship titles to you, up to your maximum number of outstanding BLOCKBUSTER Online Rentals, from and in the order that you have listed in your rental queue, subject to availability. However, BLOCKBUSTER Online reserves the right to determine product allocation among members in its sole discretion. In determining product allocation, we use various factors including, but not limited to, (i) the historical rental volume for each subscriber, (ii) historical number of outstanding rentals relative to a maximum number of outstanding BLOCKBUSTER Online Rentals allowed under a subscriber's plan, and (iii) the average rental queue position of BLOCKBUSTER Online Rentals that have shipped to a subscriber in the past.

  • At 2/13/2006 4:04 PM, Blogger Autiger2k2 said…

    well I would pay extra just to make sure i got the movies I ask for and in a timely manner, at least Quit saying they are unlimited .. when unlimited to them and others is 12 or 13. why say unlimited when it is not. just be up front about it is all i ask ... who reads the TOS? all you see is the splash page that welcomes you to netflix and enjoy unlimited DVD's right to your door they even put the word " unlimited" in Parethesis. ugh .. come on guys .. well at least blockbuster does give ya a free rental in their stores.

  • At 2/13/2006 10:51 PM, Blogger bcvbcv said…

    "Netflix's approach to handling heavy renters is reasonable."

    Reasonable? This writer has a problem understanding the concept of honesty. Netflix should abide by the contract it makes with its customers. Netflix advertises

    "3 at-a-time (Unlimited)"


    "they should arrive in your mailbox in about 1 business day".

    I do not get what Netflix says I will get. That is my complaint. I am not switching or cancelling; Netflix still is still the best one for me. But I will continue to complain. And happily join a class action suit if one gets started.

  • At 2/14/2006 2:04 PM, Blogger Tom In Texas said…

    I have been using the grocery store rental-bot whenever possible on newer releases. It ranges from about $1-$1.50 per rental. It's great to use while awaiting the turnaround from Netflix. Only I love Letterbox(w/s) movies to pan and scan. The rental-bot doesn't list which are in P/S format until after you rent them. I'm going to call their customer service and see if there's a way for me to find out about which format the movie is in before I rent it.

  • At 4/29/2006 12:28 AM, Blogger agentsixnine said…

    I joined Netflix after carefully reading the advertising on their website. The words "unlimited" and "1 day shipping" sold me. Now I feel like I was the victim of 'bait & switch' advertisement. I am not receiving the service I signed up for because of their 'throttling' tactics. My only expectation is that the company be upfront about what we can expect as consumers. They should replace the terminology "unlimited" with "you can get a lot of DVD's" or even "Up to xx DVD's per month". Advertising one service but providing another is disingenuous at best. And please spare me the read the fine print arguments. Fine print is for shady businesses. I have not left the company because I have not found a better service. But I would be interested in a service that charged per DVD so that if I wanted "unlimited" I could get them, even if it meant paying more.

  • At 6/06/2008 10:54 PM, Blogger Sal said…

    I was a loyal member of Netflix, and after about 2 years of good service it started to happen. Movies would get lost in the mail, when I talked with Netflix they said check with your local post office (alright, how come everytime I ship a movie back it never get's lost?? They only get lost coming to me) - What Netflix was doing is holding movies, and telling me that they shipped it to me, that way I wouldn't get a high number of dvd's anymore. - By the time I reported the DVD lost in mail, and received another copy, a week or so had gone by. Netflix really let me down. - So I joined Blockbuster online, and so far I haven't had no major problems, they are a little bit slower at getting me the movies, and from time to time I have to wait for a dvd that is in high demand, but out of the six months I've been with them, no dvd's have been lost in the mail, scratched beyond play, or broken. Netflix can
    *****&^^%%*vulgar words&&((%%$$$


Post a Comment

Links to this post:

Create a Link

<< Home