Comment Registration Required (Again)

The comments are turning ugly so I've turned comment registration on again.

Comments

[ruk]

Good idea...

Now, what about some solutions? I left NetFlix in disgust due to blatant and hard core throttling. I moved over to BB, and have been throttled a bit lately, but nowhere near as bad as NetFlix. Still, I suspect that the throttling will increase as business increases for BB. In other words, switching to BB may be a short term solution.

What about some other ideas? I assume NFLX biggies read this blog, or at least I hope they would. My idea is they give high volume renters the option of accepting and returning a few large shipments per month, via MEDIA MAIL. This will save money on postage. Kind of a win win.

They will still need to allocate on the new releases, obviously. Perhaps give people a specified number of guaranteed new releases on demand per month.

Now maybe NetFlix doesn't care. Their strategy may be geared towards new subs rather than retention. New subs help the stock price increase. NFLX can then issue more shares for capital investments with VOD. Who knows.

NFLX management is forward looking. They're not ENRON crooks, but they have to realize they've been exposed and can't blame the poor mailman for slow service any longer. They have to do something, or so I think.

[gir]

I think that's one thing we can all agree on - something has to be done. Incremental efficiency improvements help, but at ~$2 cost per shipment it'd only be good for an additional disk or two. Unfortunately I don't think there is any way people are going to get what they really want - two or three turns a week - for $17.99.

And I simply do not believe that ceasing to use the word unlimited would satisfy anyone. I fear that they're going to have to impose some sort of cap. It's really irrational when you think about it - people are asking NetFlix to decrease service level because they're upset about service levels.

PS. Thank you for turning registration back on. It's a relief.

[onansalad]

I'm surprised no one has challenged the legality of advertising unlimited rentals while the service limits rentals via throttling. Artificially inflating turnaround time and decreasing availability of titles is, by definition, limiting rentals. At the very least, this is false advertising. You'd think every Attorney General would be drooling over such an open-and-shut case of deceptive business practices from a popular national service.

Some of the posts here imply that Blockbuster online also throttles. What about intelliflix?

[ruk]

From my own observation, Blockbuster's tamer version of throttling comes from shipping the day after receipt, and perhaps from a further away shipping center. This only occurred recently, when my rental volume picked up. 4 days from the day of mailing back the DVD is longest I've ever had to wait.

However, Blockbuster always acknowledges receipt of my DVDs the very next day (including Saturdays). For me, both NFLX and BB are returned to a PO Box in Santa Ana.

Intelliflix gets horrific reviews, both here and elsewhere:

http://tinyurl.com/cqkaj

[gir]

Well, there are all sorts of limits. There's a limit to the number of disks the post office can deliver. There's a limit to the number of disks staff can process. There's a limit to the amount of staff NetFlix can hire (based on revenue and after other costs). And lastly there is a limit to the number of disks they can afford to send (again based on revenue). So the question of legality of the advertising term 'unlimited' isn't cut and dried.

But the real bottom line argument for the term unlimited is that they don't impose any fixed limit on any of their plans (except that odd 2-out plan). You may get 10 disks one month and 14 the next. People may not like that definition, but just because you don't like it doesn't mean that NetFlix doesn't get to use it (till you can convince a court to tell them they can't).

BTW: Re Intelliflix - there was a post back on January 27 talking about Intelliflix. As I recall quite a bit of the feedback was very negative.

[BloggerOne]

There's a good solution to the renting problem...join a site like www.Switchdiscs.com

It's free, doesn't get much better then that. Support the small guys not the corporate giants.

[ruk]

www.Switchdiscs.com isn't free. you still have to pay for the postage and mailing envelopes.. and I imagine the wait time and scratched disc problems will be even worse.

waste of time.

[NetflixShill]

"My idea is they give high volume renters the option of accepting and returning a few large shipments per month, via MEDIA MAIL. This will save money on postage. Kind of a win win."

You stole the idea. I posted it several times over the last few days. Also, some independent companies already do it. Given a large enough shipment (like 5-10 discs at a time), Media Mail could be cheaper than sending out individual discs. They could also offer insurance and proof of delivery without much expense. Out-of-print titles should ONLY be sent by Media Mail with delivery confirmation - to prevent thieves from saying that something was "lost" and keeping it. Media mail rates are very reasonable.

up to 1 lb for $1.59
up to 2 lbs for $2.07
up to 3 lbs for $2.55

http://www.usps.com/consumers/domestic.htm#H6

Each DVD weighs about an ounce. Cardboard inserts as used by GreenCine weigh an ounce. So they could ship a bunch of DVDs with padding for a few bucks each shipment. That would save them a bundle, and they wouldn't have to throttle shipments for heavy users. I don't see why they don't do this. It is silly to ship DVDs one at a time and have them get broken at a very high rate. (Nicheflix claims that ~10% of their discs are broken on the way back to them, even using padded inserts. My experience can support this; I've rented about 80 titles and 8 of them are no longer available.)

[hall]

Geez, I thought this story was about this site requiring registration again... Anyway, please leave it this way. You gave no-registration req'd a 2nd chance and it just didn't work.

[NetflixShill]

"Anyway, please leave it this way. You gave no-registration req'd a 2nd chance and it just didn't work."

It didn't work, because at the same time 100,000 people were drawn in by a big media campaign that portrayed the site as a forum for complaints about Netflix. Along with the usual trolls and shills. i still maintain that registration will reduce the amount of dialogue by 90% or more. Past experience supports this. TypePad sucks. End of story.

[pachelmel]

I have been a netflix customer for about 5 years, been to a focus group they set up, and I work for the post office. There are a few things I've noticed. When at work we are told that the movies are to be hand sorted and not put through automated equipment, I get fewer rentals. If I used a return envelope in a state that is a 3day delivery state from where I live, there is a delay. I have found that if I save up the envelopes for the PO Box in my delivery area and put 2 or 3 movies in them, there is an increased turn around. I had 3out until the focus group. They gave me a two month upgrade to 5out and then I put myself up to 8out. Any delivery delay I've seen in the past few years is easily explained by new rules passed down from the post office for netflix handling.
This last December we were told to hand process the netflix because they were not putting tabs on them to seal the outgoing envelopes better. I noticed a delay in my personal delivery, along with shredded envelopes. Don't be surprised if turn around is soon increased since they are tabbing the outgoing deliveries again.

[Mr. Nethead]

I think this is for the best. Registration is a good thing.

[ruk]

pachelmel -

sorry, but I have a hard time buying what you're saying. it is pretty well established that people on free trials don't have problems with the post office. but magically, after a month or two of service, the postal service suddenly falls apart. it is a big joke to blame this on the post office.

especially the little NFLX game where 3 DVDs mailed back on the same are "received" by them on 3 separate days!

[Aron]

Alright, so I just skimmed some of the 400+ comments in the previous post and have some ideas about what I think is happening.

What I *don't* believe is that people are really mad that Netflix said 'unlimited'. I think that's a straw man. I think that people try to incorporate illegality and advertising fraud into their complaints in order to elevate the importance of the problem. If it is merely a question of whether their service is sufficient for 18$, who is going to care? But if it is an illegal or unethical fraud perpetrated on America, well then, by god, more people are going to listen.

I think the real psychological hook for all this anger comes from the fact that people are shown a utopia, and then it is stripped away. Netflix treats new members with it's best stuff, and as it figures out who rents a lot of movies, it starts to take away this preference. These renters become the red-headed stepchild and don't like it.

***It's not that they were lied to when it said 'unlimited', it's that they saw a service for a short while that seemed 'unlimited', and then it was lost to them****

I don't know the solution here precisely. I think Netflix HAS to throttle in order to make their business model work. Some would therefore says its a broken model, but every alternative I can think of actually leads to a worse situation for nearly everybody, including heavy renters.

I'm a Netflix investor, and know the numbers. It costs them about 1.90$ per average rental. So, those of you at 10 discs at above are costing the company money. Some of you are costing them an enormous amount of money. That's fine, it's how the system is designed, and there is no ethical problem in using the system as it is designed. But if you are looking at this as a business problem, you should understand that the money lost to you has to come from somewhere.

The first thing a lot of people will suggest for fixing the problem is to put explicit, announced, public limits on the service. Obviously, this will raise the price for heavy renters. It should also be obvious that Netflix could probably get rid of throttling and the potential PR and legal problems looming. Why don't they do it? Are they dumb?

No, in this scenario, the tables flip and it's the irrationality of the light users that comes into play. The flexibility of 'unlimited' is that you can rent 2 movies one month, 12 movies the next, and not worry about optimizing your plan to fit your usage pattern. It's similar to why systems that make you pay per rental are doomed to fail, people don't like thinking about the money equation over and over. A limit begins to feel like a 'goal', and if not attained they may quit, even if they are still really getting a pretty good deal.

So - for Netflix to support it's heavy users, it must make money on light users, in order to make money on light users it needs to offer a system who's merits aren't necessarily price. Another corollary is that the larger Netflix gets, the more it can take advantage of its size to lower prices or increase service across the board. Which it has done. period. More shipping centers (up to 37) gets movies to people in a single day, and 18$ was an impossible price point 2 years ago.

So as someone who likes Netflix, I find it frustrating, because I believe that these complaints are self-defeating. They will hurt the company and in the end, hurt the complainers themselves. There *IS* a limit to how much a company can lose money on specific customers before the business model breaks and has to be redesigned. Heavy renters should NOT want that to happen.

[Aron]

". It's similar to why systems that make you pay per rental are doomed to fail, people don't like thinking about the money equation over and over"

I feel this may ring as insufficient or inaccurate. Blockbuster charges per rental from their stores and has clearly worked, right?

The difference is that online you have the unknown delays of the postal system. It's harder to have due dates and late fees when you aren't physically handing the disc back to the store. Blockbuster struggles with customers who argue that they returned the movie and an employee lost it. It would be significantly worse with the USPS existing as a complicating middle man.

When Netflix first launched it had pay-per-rental. It didn't go anywhere.

The conclusion here in my opinion is that the system that Netflix settled on was something of a magic bullet, a cosmic aligning of all the various angles of the problem, and that's why they have become so popular so fast. That's also why after 5 years, and a crew of smart MBA's at Netflix HQ pouring over detailed data, the business model hasn't really changed much.

[Becky]

If Blockbuster worked so well, Netflix wouldn't.

[cmmsml]

"Geez, I thought this story was about this site requiring registration again..."

So did I, but it seems that no matter the original topic, its immediately hijacked into a "complain about throttling" thread.

I think the required registration is a definite must after sifting through the 400+ comments in the "Comments on the Netflix Throttling Story" thread. That one really sunk to a whole new low.

[gir]

Well said Aron. I agree 100%. Too bad there is no concise, impactful way to convey the concept. The words 'smoothing' and 'balance' just don't do it.

BTW: Your second post was confusing. I had to read it twice to realize you were expanding on your first post. Initially I thought it was someone squatting your nym and arguing with you.

Disclaimer: I do not own any NetFlix stock. I do not work for NetFlix. I am a satisfied customer, nothing more.

[BeefJerky]

"i still maintain that registration will reduce the amount of dialogue by 90% or more. Past experience supports this."

You keep bringing up and "arguing" this point, yet, not a single person has disagreed with you. No one denies it lowers the amount of posts. On the other hand, it has shown itself to reduce the amount of trolls and garbage posts. Whereas most of that "90% or more" is made up of posts that are pointless or from trolls, only a small percent of the registration-required posts are that way. So, ~90% crap (not to mention the many more posts to sort through) or ~10% crap? I choose the 10% crap and registration. I don't enjoy reading flame wars and troll posts, and I don't believe that most of the other readers do either. I, for one, would much rather read a small amount of on topic and productive posts. On the other hand, based on your posts, you seem to enjoy the great amount of garbage posts. If registration really bothers you this much, and you enjoy reading garbage posts and arguing with trolls, I suggest you stop reading this site, and stop wasting your time here complaining. In that case, go to slashdot, where, I believe, you'll fit in great.

[gir]

"I don't know the solution here precisely. I think Netflix HAS to throttle in order to make their business model work."

"The flexibility of 'unlimited' is that you can rent 2 movies one month, 12 movies the next, and not worry about optimizing your plan to fit your usage pattern."

True and true. One alternative I can think of is capped plans with roll-over.

Sign up for the 3-out plan, it's capped at 8 per month with roll-over of unused rentals, cumulative to perhaps 8 total. Rent 4 one month, the remaining 4 roll-over and you can rent 12 the next.

One advantage of this is that new customers can't rent more than 8 the first month. There'd be no room for anyone to claim NetFlix is employing bait and switch tactics (which I don't believe they're intentionally doing today).

Unfortunately I don't know what psychological impact this would have for prospective new customers, even though it preserves the freedom and flexibility of the current plans. I do wish people were more rational.

[fraygos]

ruk -

your counter: "especially the little NFLX game where 3 DVDs mailed back on the same are "received" by them on 3 separate days!"

Which could be blamed on a dishonest mailman instead of netflix. He could get all 3 movies, and watch them on singly on 3 seperate days. Considering todays story about a mailman that did just that, it is still plausable its not entirely netflix's fault.

[Jack]

Like many I am outraged that Netflix secretly set up a program to penalize frequent users. I have experienced the slow turn around and difficulty in renting the most popular movies. Netflix even took the defensive and arrogant position that if frequent users leave they can live with their decision. Whatever happened to customer service? Netflix deserves a class action law suit so that all users who suffered from not only unable to rent more movies but also were denied the most popular movies. During the last presidential election Netflix failed to have "Stolen Honor" a documentary about Kerry's questionable military service available to subscribers. I plan to look for another company that will be ethical and honest with their customers.

[Francisca]

holy cow.... 436 comments on the previous post.... crazzzyyy...

[E. Craig Crawford]

I'm OK with registration so long as I have the right to agree or disagree, say that a person's argument is specious or well thought out. But, personal attacks are another matter. So, registration is good as long as it eliminates those attacks. I'm not certain what all the term "flaming" incorporates, but I have my own opinion about what it includes. I should certainly be allowed to call Reed Hastings a liar, and "unlimited" false advertising since I'm relying on evidence to support my comments. But, calling someone a shill because they think Netflix is the best thing since sliced bread is out of bounds, IMO. Actually, shill is about the mildest of the name calling I've read on this site.

Now, in keeping with the trend, please humor me while I go off topic. I'm far from a finacial or marketing expert, but I remember a few times in my life as the price of commodities increased that a restaurant would shop for lower cost food to prepare for their customers. Not surprisingly, the lower cost dishes served to their customers were inferior to what they were accustomed to. The restaurants lost business, eventually having to close their doors. I have often thought that I would have gladly paid the price increase to allow those restaurants to maintain the quality of the meals they served.

Would Netflix customers willingly pay the price increase to keep from being throttled? I don't know. I don't even know what that increase would be. I personally think I would pay up to $15.99 a month in order to receive 8 movies a month on my 1 out plan.

Yes, on my 1 Out plan Netflix is now throttling me as I go into my 3rd month as a customer. Will, I dump Netflix? Maybe not; I still think that $2.50 a movie is reasonable in light of the various features and conveniences of the service, but I would like to receive more each month on my current plan.

[gir]

With all due respect, you can pay more to get better service. Upgrade to a higher plan without changing your usage rate. You'll become a light user (relative to the prior plan) and start seeing higher priority. The increased plan limit gives you added flexibility - you can keep a disk or two on your shelf ready to watch rather than waiting for a disk to come in the mail. It's a win-win IMO.

For 8 a month, the 3-out plan works out to $2.25 a disk (not including tax).

I know some people claim higher plans result in more throttling, but I think that's specious because their assumption always includes trying to get even more disks. I find that self defeating - if you want better service, you have to upgrade *without* trying to get (significantly) more disks.