Netflix Penalizing High-Volume Customers?

Don sent me an e-mail explaining that "The Ladykillers" was on perpetual wait in his account. Don is an 8-out subscriber and rents 20 - 30 movies per month, so he's a heavy user of the Netflix service. He sent Netflix the following e-mail:

I have reason to believe movies listed as wait on 8/accounts are actually available on 3/accounts. Is this true?

He received an automated reply and within 2 hours the movie became available in his queue.

Bizarre bug in the Netflix queue software or are they penalizing high-volume customers?

Comments

[Mike]

Penalized!!! and BB does it too!

[Vance]

I recently switched to 3 at a time from 8 because I felt netflix was dishonest. When I moved to 8 from 3 I noticed that they were much slower to admit recieving the movies, much slower in sending them out, and telling me everything I wanted had a long wait. I even sent one of the movies certified back to them so I could see when they actually got it. It took them 3 days to admit to it in my queue, then for another 3 days it said SHIPPING TODAY in my status for a new movie. So 6 days after they got the movie they dropped another in the mail. To me it was paying for a service I wasn't getting. With 3 at a time, everything is quick like it use to be, and all my on holds and long waits dropped to available and short wait almost instantly.

[Joe]

I was on 5-out and dropped to 3-out with no improvement in service. Once upon a time, I could get all the new releases I wanted. That is no longer true. I have given up, quite frankly (I've gone back to renting popular new releases at retail stores like Blockbuster and Hollywood). I keep my Netflix memebership for hard-to-find and older titles that are not available in stores.

Netflix has reprogrammed their allocation and turnaround systems in recent months, I believe, in an effort to save money on very active customers. They advertise "unlimited," but have put up roadblocks (EXTREMELY slow receiving, poor availability on new releases for certain customers, delayed shipping, etc.) in an effort to keep your monthly rentals lower, thus keeping their bottom line fat. Which is, to me, very dishonest. There was once a time when they would check in my mailed-back movies early in the morning (by 9a.m. CST) and confirm my new selections by noon. That is no longer the case. Now, check-in for returned discs happens much later (noonish), and the confirmation process on my next selection can take two days. Until about three months ago, I could mail a movie back on Monday and they would ALWAYS receive it the next day (Tuesday), and ship out my next selection THAT SAME DAY (Tuesday). Now, it's ALWAYS two days (Thursday). Then, instead of shipping my next disc out on Thursday, that often happens on Friday, and I get the disc on Monday instead of Saturday, and the cycle repeats itself.

Needless to say, my ability to rent more discs per month is reduced greatly, and my ability to know when to expect a disc has been ruined as well. I would prefer it if they said you can only rent X-number of discs per month for this plan, but then process and ship your requests promptly instead of the delays they have obviously built into the system to maximize profitability. They are, in effect, committing fraud. I have called and bitched to their customer service reps who always feign ignorance and say that they cannot say why a title is not being shipped on a particular day. If you get really pissed, they offer a bonus disc, which is a nightmare to use given the way they have mucked up the system, but that's another story altogether. Netflix will probably get sued for this by Ralph Nader, or some money-hungry class-action lawyers (Hollywood Video recently settled a late-fees class-action suit, due to, among other things, deceptive business practices). But before that happens, maybe they'll wise up and realize that they're losing customers due to their deceptive business practices.

[Sam]

I agree completely.... I recently switched from the 8 out to 3 out @ $15.99 and now get all of the new releases that I had to wait months for.

The Washington State Attorney General's office is interesting in hearing stories from WASHINGTON RESIDENTS regarding this matter.

http://www.atg.wa.gov/

[Kim-Jong Il]

Netflix is a dope trick biaatch. If the lawyer scum from Washington hurts this company I will nuke them. I can do it you know. I really can.

[Becky]

I think the trick to having quick turnaround from Netflix is to write a blog about them. I have experienced nothing but 3-day turnaround since I joined in January, and I average 12 discs per month.

[adam]

Thanks for the heads up...

I'm a new 3-out customer, been with the service for about 3 weeks now. Already I've received 2 unplayable movies, and when I requested new ones, those aren't added additionally to the 3, so I actually lose out on a movie for Netflix's mistake.

So far, response times have been quick, with same day receipt and new selections being sent out, however, just yesterday one is coming from San Jose, instead of my local warehouse, so I have to wait for that.

I called Netflix and explained that they need to increase their inventory in order to provide a good customer experience, and they went ahead and gave me 50% off for next month's fee due to the wait time on this movie.

So far, I'm happy with Netflix's resolutions to my problems.

Thanks for the heads up on the 8 out, I will NOT be switching anytime soon then... Maybe the 5 out, but if anything starts changing, I'm cancelling or moving down to 3 out for $15.99

Suppose that it is your turn to host thanksgiving. You're hosting your extended family of around 20 people. All those people want different food: some like the traditional turkey, cranberries, etc... but some only want to eat Sushi and Hummus. So you make your budget, say $5/person, you scurry around and you buy what you can, maybe taking a week to plan everything out.

Now start scaling that up ... 200, 2000, 20000, 200000, 20000000. How are you going to feed all these people? Well the first thing is, you have to order way, way in advance. You can't go to your local grocery store and buy 1 million pounds of cranberries. Yikes, you've gotta pre-order from Ocean Spray months in advance because it is the biggest order they've got! And you've still got to pay attention to the vegans who can't eat any of the food you planned--buy some organic plant matter or something.

Then, suppose 200,000 uninvited (but welcome) guests show up. Shoot -- what to do? Well try to take a (really) quick gauge of what they want and start ransacking all the local grocery stores.

Well the little party was a success: everyone got enough turkey, cranberries, ... , and sushi. The hosts didn't buy enough corn bread and it sucks that some people didn't get any. It got passed around, but at the end the very long table, it ran out before it could get to the Ohio end of the table (the table starts in Kansas and ends in Ohio). But c'mon are you going to complain when you got everything you wanted except corn bread? And do you think the hosts singled a few people out of the crowd to be especially nice (mean) to? No, they were too busy serving 2,300,000 guests thanksgiving dinner (almost) exactly what they wanted :)

Just a story I made up ... has nothing to do with the topic on hand.

[adam]

I just called my local Hollywood Video. They have a 3-out plan for only $9.99 per month.... hhmmm......

Folks, this is old, old, stale old news. You're beating the greasy spot in the pavement where the dead horse used to be.

Once *AGAIN*, go check out http://dvd-rent-test.dreamhost.com/ .

The more often you turn your disks around, the more often you will see waits. That's whether you are on 3-out or 8-out or 2-out or whatever.

NF does not 'sit on' your disks. The disk mailers arrive in giant sacks on trucks. How are they supposed to be able to magically pick yours out of the tens of thousands and set them aside to punish you? And that merely keeps the movies you are returning from being able to be sent to someone else. If you are suggesting that the movies are opened and checked in, but your account is not acknowledged, well, that doesn't happen either.

NF sends you an e-mail when they receive your disks, and when the next ones are sent. Between the time the disk leaves your house and the time it is marked as received, it is the post office's fault. Same thing for the time between you are told it was sent and it actually arrives.

For the fellow who sent his disk back certified, that is actually counterproductive. Certified mail won't go through the system the same way. They would have to have someone come down to the post office, sign for it, take it back to the hub, open it, and process it.

The more movies you rent in a one month period the less of a priority you become because netflix sees you as being less profitable. They cater to there free trial customers and there newly acquired customers. Check the website previously posted and it will explain what Netflix's tactics are.

[RAYMOND KNIGHT]

TO the person who wondered how delaying somebody's DVDs could be done. It is called software. They know who you are after a DVD is scanned in. Anything can be accomplished through progamming.

"How are they supposed to be able to magically pick yours out of the tens of thousands and set them aside to punish you?"

By using an order fulfillment program that prioritizes the processing of outgoing orders based on certain criteria, like how many discs an account has received in the past 30 days, based on the date the account was open, or just about anything else. Such programs have been in use for at least 20 years.

"For the fellow who sent his disk back certified, that is actually counterproductive. Certified mail won't go through the system the same way. They would have to have someone come down to the post office, sign for it, take it back to the hub, open it, and process it."

Sorry for the double post, but you're wrong again.

Netflix (in most markets) uses a PO Box as a return address on the envelope. It really isn't a PO Box in the traditional sense, but something known as Caller Service. Netflix backs up their truck to the USPS loading dock, papers are signed, and mail is loaded. The certified mail is just a line to be initialled on the manifest - no additional special handling required.

[Manuel]

How would you know "20-30 movies per month" is considered a "heavy user" unless you were a Netflix insider. This site is so full of BS. It's nothing but a get-together of Netflix shareholders touting product to boost their shares. Consumers, if you want to get the real thoughts of Netflix and their shareholders read "Waah, waah, I can't get more than twenty discs a month!" by Carl Cravens 10/15/04. Just Google the title.

[Aron]

Yeah, yeah... There are shareholders on here. I am no longer but might be again eventually. You have to apply a certain level of filtering to everything you read and some judgement to the intentions of the writers. Shareholders present the business case behind the Netflix/Customer relationship and that should be useful for anyone who wants to understand the evolution and details of the service: the stated aim of this site.

Points:
1) Netflix has made a small profit in a handful of quarters. The total profit over its lifetime is negative by many millions of dollars and that is not likely to change any time soon.
2) A customer on the 8 out plan averaging swings of 20-30 discs/month is fairly breakeven. A customer that averages 40 discs/month loses Netflix 32$ per month.

I don't find it such a shocking revelation that service for the "maximizers" is detuned. I don't know the extent of this activity but I can accept it goes on. You can bet that Netflix ensures topnotch service for the majority of its customers, and probably for a fairly large percentage of its unprofitable ones.

Eventually, I believe, the unlimited plan will be discarded. Until that time, maximizers have to deal with somewhat reduced service and incredibly cheap movies. Man, life is rough.

The people really getting screwed in this arrangement are the ones paying 18$ and only renting a couple movies a month. But they, like the maximizers can QUIT AT ANY TIME. Unlike, say, Social Security (that's another topic)...

[vn]

You don't need to be a shareholder. I think it's in the best interests of the customers also not to kill the goose that lays the golden egg. If you pay less than $2 a disc, Netflix loses and could not survive for long.

[adam]

Been a memeber for a little over 2 weeks now.

As SOON as my TWO WEEK FREE TRIAL period ended, THE DELAYS HAVE BEGUN.

I now have movies coming from out of state, and my movies are no longer being received in a timely fashion.

I mailed in two movies on the same day locally, and one was received and they claim the other one wasn't yet.

What a load of BS. They probably prescan the item to see who's it is, and then officially scan it as "received"....

Like I told Netflix on the phone, there is was too much competition in this market for f&ck ups. Hollywood Video has a $9.99 for 3 out unlimited plan, and you can go in there as many times as you want daily, hourly, whatever you want, so I'm not gonna put up with this for much longer.

Yeah it's nice for rare, older titles and old tv episodes, and it's nice if you live in a rural area, but, for urban dwellers, we've got a billion different options.

If Netflix thinks that they have this market all locked up and they can start screwing with their customers, I tell Netflix to "BRING IT ON."

I'll bad mouth the company to everyone I know, and we'll see how many new customers they get. As soon as Wall St hears that Netflix is DISCRIMINATING against certain customers, the STOCK PRICE WILL HIT THE TOILET BOWL.

-Adam

[Adam]

Look,

Here's how you do it:

You have three bins in receiving.

1. Labeled "A" for Trial Customers
2. Labeled "B" for Customers that rent 3-6 movies monthly.
3. Labeled "C" for die hard movie renters.

When a movie comes in, it's pre-scanned, which hits a database and then tells the employee which bin to put the movie into. Now, the employee has no idea about what's going on. He just scans the movie, and puts it in whatever bin he is told to put it in via the scanner.

Now, the database that the scan hits against, basically has a customer "rating" system, determining the good customers from the bad ones, and then of course the customers on the free trial.

The free trial bin is processed immediately, as soon as business opens for the day, processed, and new items sent out at once, probably a dedicated truck going up to the post office and everything.

The second bin, is processed more quickly, but not as quickly as the free trial bin. The second bin may get processed later on, after lunch, time and weather permitting. Once the movie is scanned as "received" the new movie may or may not be scanned to go out, depending on load of the trail customers. If you're lucky, you may get another movie going out on the same day that your previous movie was received.

The third bin just sits in holding for a couple days. No one touches the bin. It's put behind some old boxes, and the employees actually forget about the bin, until someone finds it behind the boxes a couple of days later. Movies are scanned in as "received" but only at a 50% ration, the other 50% are placed into a 4th bin, labeled "screw off". Those movies are processed again at a 50% rate, with the remaining 50% being marked as "lost" and a charge being placed to the account.

So, as you can see, it's actually quite easy for Netflix to screw over high use customers. Anyone who thinks they don't is just screwing themselves.

-Adam

[manuel]

I think the multiple bin theory is too elaborate and inefficient. Just scan the DVD barcode, and make it available to the next customer BUT regarding to the account who returned it...a) infrequent renter--queue will say movie received today. b) frequent renter--queue says movie received day X (i.e. 2-3 days later, Netflix's discretion). It's all behind the scenes so the frequent renter only notices that it took a long time for Netflix to receive the movie. No people input just preprogrammed decisions.

[Reed Hastings]

Adam, you have done a good job deconstructing our delivery system, but you left out one thing: a special bin we created just for you. You see, we've been watching you. Even before we got into DVDs we had several other corporations set up as the American agents of the KGB. We've been watching you for some time. I know your doctors want to DESTROY us, they want to TAKE AWAY OUR EXISTENCE. But we will live, and we will keep pursuing our plots until you and your country are DESTROYED. So, take your medicine and try to IGNORE us, but it won't change REALITY.

You can try to spread the word about our discriminating practices. Go ahead and try. HA HA. Our fingers run deep into the inner workings of this country and we will SUPRESS you. We have BEEN DOING IT FOR 50 YEARS.

[adam]

Hey Reed,

Too bad you don't make any sense.

""How are they supposed to be able to magically pick yours out of the tens of thousands and set them aside to punish you?"

"By using an order fulfillment program that prioritizes the processing of outgoing orders based on certain criteria, like how many discs an account has received in the past 30 days, based on the date the account was open, or just about anything else. Such programs have been in use for at least 20 years."

You misunderstood the question entirely.

When a disk is received, you get an e-mail.

Your assertion is that the reason you are seeing delays is because NF receives your disk and sends it on to the next person and delays the notification and processing on your account.

This. Does. Not. Happen.

The time between you putting a disk in the mail and you getting the e-mail that it was received, the disk is in the hands of the USPS. The time between you getting an e-mail that a disk was shipped and it arriving in your mailbox it is in the hands of the USPS. Positively.

For both sides of this argument: Prove it.