'Throttling' Angers Netflix Heavy Renters

[Synnical]

http://news.yahoo.com/s/ap/netflix_throttling

By MICHAEL LIEDTKE, AP Business Writer 1 hour, 35 minutes ago

SAN FRANCISCO - Manuel Villanueva realizes he has been getting a pretty good deal since he signed up for Netflix Inc.'s online DVD rental service 2 1/2 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.

The little-known practice, called "throttling" by critics, means Netflix customers who pay the same price for the same service are often treated differently, depending on their rental patterns.

I knew it! I complained to Netflix a couple of months ago about the delay in receiving DVD's. Their response was that they had no control over the US Postal Service. Now, they confess the truth, and yes, as the article states, it is in their "Terms of Use":

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 subscribers who receive the most movies may experience that (i) the shipment of their next available DVD 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 subscribers. Other factors that may affect delivery times, include, but are not limited to, (i) the distance between the distribution center from which your DVD was shipped and your delivery address, (ii) the timing of your placement or adjustment of movies in your queue and (iii) circumstances impacting delivery by the U.S. Postal Service.

http://www.netflix.com/TermsOfUse

I was renting about 12 DVD's a month, that number has dropped in the past few months.

[myrna minx]

1. Wow-They sure always find a way to screw the customer.

I guess I won't sign up for Netflix. I was considering it too.

[SmokingJacket]

10. No, no, you should definitely try it.

If you watch movies, even if they do slow down delivery for people who rent a lot, it's STILL way better than going to Blockbuster. See my post below; I can't tell you how much I've enjoyed having this service.

[myrna minx]

17. Well I see that many people here have had a good experience

with Netflix. I have a movie rental house across the street from me so renting movies is not inconvenient for me, but I like the idea unlimited rentals. A constant flow of movies are required on order to endure our Minnesota winters. :-) I guess I'm disappointed that netflix would punish those that enjoy their service ---alot. ;-)

[JVS]

42. A friend of mine had unlimited rental at Blockbuster for the same price...

and was able to do the turnover quicker than netflix

[Maru Kitteh]

48. Blockbuster has been great for us and starting next month we get a free

in store rental every week on top of the online ones. Good deal.

[dysfunctional press]

18. it really does suck.

i tried both netflix and blockbuster online- and they both sucked- it's A LOT easier and FASTER just to go to the video store.

with blockbuster, in two months, i NEVER got my first choice(the same movie the whole time) even tho it was showing as "available".

with netflix- the deliveries were really slow, and three times in two months i recieved broken/unplayable discs.

don't bother.

[Poll_Blind]

2. Is there an alternate but similar service? n/t

PB

[SaveElmer]

4. Blockbuster...

Has a competing service

[bryant69]

8. Well that's good. Blockbuster is certain to be less evil

It just moves on to the next movie on your list - but then i usually watch obscure tv shows and old movies, so it's not as big a problem for me.

Bryant
Check it out -- > http://politicalcomment.blogspot.com

[thebigidea]

27. Blockbuster's incredible evil is what made Netflix what it is

[Synnical]

28. And does the same thing

From its "Terms and Conditions":

http://blockbuster.com/corporate/displayTermsandConditions.action

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.

Not quite as obvious as Netflix, but then, Netflix had to deal with a Class Action Suit relating to false advertising, as noted in the original link.

[YOY]

15. Theres also Netflixxx

but that's a naughty one!

[Wickerman]

16. GreenCine

I tried them for awhile, but found their San Francisco distribution didn't work with my Minnesota address. They have a more diverse selection movies, package their movies for shipment better and give a portion of their profit back to the artistic commnunity.

That said, I still love the heck out of NF- just willing to try another service.

http://greencine.com/main

[AtomicKitten]

46. however the SF distribution center works great with my SF address

We are on the 3/movies at a time deal and see six movies a week.

[Cooley Hurd]

3. They've done it to me, too...

...although they never contacted me about it, I noticed that my turnarounds started to slow down after a while (I watch them and return them all the next day).:grr:

[Tempest]

5. Time for a competitor to step in

And publicize the fact that they won't throttle like Nexflix does.

An ad slamming Netflix's policies would bring in thousands of new customers.

[RebelOne]

6. I rent about 12 per month and I have never had

a problem with turnaround time. I usually receive the next one within 1 to 2 days. Could be because one of the distribution centers is in a town close to me.

[SmokingJacket]

7. Well, they're still an incredible service.

Since we've had it, we don't watch more movies, but we definitely watch *better* ones. And it's cheaper, and we don't have to drive out to the Strip-Hell, and no more freaking out about forgetting to take them back.

I *loooove* netflix.

[RebelOne]

12. I agree. You can't beat their service.

Beats having to run to Blockbuster 3 miles down the road and then rushing to get the movies back on time. Plus, Blockbuster is so much more expensive.

[Hamlette]

9. I love netflix....still

but I don't "rent" 22 movies a month.

It says the guy gets 13 movies a month and is not identified as a heavy user. 13 movies for $18 and no late fees is still a great deal. That's probably how many I get in a "good" month. Some months maybe half that many.

I'm not saying netflix should do this...I think they're stupid to do it but they might have a good reason.

[LostinVA]

11. That's one reason why I cancelled mine in January

[peacebaby3]

13. Interesting. I started out on the 3 DVD plan and found it was hard to get

all the movies I wanted to watch so I moved up to the 8 DVDs at a time plan and now it is very rare for me to not get a movie that is at the top of my list (which are usually new releases). They also ship to me on the same day they show my movie returned. I remember having this discussion with my friend and she changed her plan as well and got better service too. We both think that higher paying plans get better service.

[Synnical]

26. See that just sucks

'Cause that's not what they advertise. It's the same thing they're trying to do with the internet, don't you think? Pay more, better access . .

Makes sense regarding the algorithm Netflix is using though, if you have more DVDs at home, you're returning them less frequently, yes?

[Katherine Brengle]

41. yeah but it sucks for those of us who don't want to shell out $50/mo---

I'd love to rent 8 DVDs at once, but it's waaaaaay too expensive--that's why I went with Netflix in the first place--to save money.

If this is some way for them to try to get people to bump up to a higher-priced plan, there's no way that is ethical.

[kurth]

14. The dirty secret is out

What a bunch of weasels. This is like a buffet telling frequent customers that they can't eat hot foods.

[Greyhound]

19. Just another good idea that corporate bastards can kill.

I've been going through this for months now, just can't decide what to do. Blockbuster is red and probably is just as bad, if not worse. While Netflix is more blue the CEO (or is it chairman?) is a heavy re:puke: contributer. It's a dilemma. :shrug:

[NightOwwl]

20. No wonder I got "The 40-Year Old Virgin"...

practically the day it was released on DVD. I was shocked they sent it to me so soon.

I'm a very infrequent renter...so maybe I was pushed to the front of the line.

ETA: Loved the movie!

[alarimer]

21. I think this may be happening to me

I have been getting movies lately from distribution centers as far away as San Jose, CA. I live in TExas. So obviously the turnaround time is greater. Normally I like to get movies Thursday or Friday, watch them over the weekend, then return them Monday. Several times, though I have sent mmovies back on Monday that they have not received by Friday (and these were only going from Corpus Christi to Houston, TX- about 200 miles). So I end up renting 9 movies or so a month. I don't think that is considered a heavy renter. Still, 9 movies at the local video store would be close to $30 or more with tax for new releases so I still save. I think this policy sucks though.

[Synnical]

24. That exactly what happened to me

We have the same viewing habits. The turn around time became 7 days. I'd watch the flicks over the week-end, drop them in the post office box on Monday and I wouldn't get the next batch until the following Monday. Prior to that, it was a two day turnaround. What really irritates me now, though, is that they lied to me about the delay. That said, I probably won't be leaving the service, but I won't be praising it as I used to.

[Spirochete]

22. They haven't done that with me

I've gotten 19 movies in the last 30 days, and that's been pretty typical. I get a pretty fast turnaround, because there is a NF outlet in Salem, about 60 miles away. I don't think they have started throttling me yet, but I'll see 3hat happens in the next couple months, if they have just started doing this.

[SnowGoose]

23. Priority to infrequent renters or simply delaying shipments?

Let me preface by saying that I've been very happy with Netflix (had it for maybe 8-10 months). Even if this were happening to me, I'd still think it was a good deal, since no video store I've ever seen has the kind of deep catalog they have, and due to the lack of late fees.

That having been said, I can't quite figure out exactly *what* is happening.

Is it "we give priority to those members who receive the fewest DVDs through our service" which seems fair to me. If you're paying the same but renting a lot more, what's the problem with letting someone else get in line before you?

OR is it that they are "delaying his shipments to protect its profits."? That seems essentially different, and would piss me off, since the ads specifically say that it is "unlimited" rentals. It's not unlimited if they start cutting you off with too many rentals.

[Synnical]

25. Delaying shipments

Both myself and the infrequent renter signed up for the same service at the same price. I dare to try and utilize the service to the full extent it was advertised, and I'm penalized. Irritates me - that and being lied to about it.

Other than the delays, I've been pretty happy with Netflix - been using them since Nov. 2003.

[leeroysphitz]

29. Screw Netflix and Blockbuster, ESPECIALLY Blockbuster...

I steal almost all of the movies I watch from usenet these days. Instead of paying for radically overpriced blockbuster brick and mortar rentals or hoping to randomly receive a movie when I have the time/ desire to see it via online rentals.
All for the low low price of my bandwidth (60 cents per gig, a typical good quality film runs around 700 mb), the price of a blank dvd-r (around 40 cents per disk depending on sales etc...) and the price of the electricity required by my computer to download/ encode/ burn the film to dvd (???) I can get first run movies as well as hard to find classic titles that I can watch when I want for as long as I want all in the comfort of my own home! I can then create additional copies to give to friends and loved ones and they make GREAT stocking stuffers!

Why even as we type I'm burning a copy of the 1972 classic animated feature "The Point" (produced by, and featuring the music of, Harry Nilsson as well as the voice talent of the incomparable Ringo Starr) for my son. Try finding THAT title at your local Blockbuster, and for less than the price of 1/2 gallon of gas!

Intellectual property is theft. :)

[kwyjibo]

47. Blockbuster actually has a good program that competes with Netflix

They have a movie pass, it's a little more expensive than Netflix, but you don't have to mail your movies and wait for more to return. You can go rent two movies, watch them, go back to blockbuster, rent two more, watch them, go back, etc.. you can rent as many movies as you can watch and never get "throttled."

They probably don't have as many movies as Netflix though, but when I had the movie pass I hardly ever had a problem of finding what I wanted to see.

[Hotler]

30. The little-known practice, called "throttling" by critics,

Hhhmmmmmm...you think credit card companies throttle the time it takes them to post payments??? Ever get banged with a late fee you know just ain't right?

[Synnical]

31. I haven't - but I know what you're writing about

"Billing Cycle" and "Due By Date"

[alarimer]

35. That happened to me this month

I could be wrong but I could have sworn the due date was Feb 2. I paid online on the 1st and got a $35 late fee. I went back and looked at last month's statement and it said the due date was Feb 1 but it still should have counted. The cutoff is something like 3 pm eastern so I must have missed that but it still sucks.

[BushOut06]

32. I generally like their service

And I can't stand going to Blockbuster, so it works pretty well for me. I get 3 DVDs at a time, usually takes about 1-2 weeks to watch them.

The only complaint I really have is that their DVDs tend to be scratched up - got one that was so bad it was unplayable. But they are pretty good about getting replacements out to you. I've also had DVDs that have gotten lost in the mail, they're pretty good about that also.

[RoyGBiv]

33. Marketing ...

This is the fault of their marketing and not a bad practice in and of itself. What they should do, to avoid angering people over things like this, is sell levels of service that allow one to rent a certain number of movies per month. This is what they actually are selling; they just don't package it that way. The packages they offer give the illusion of an "all you can eat" deal, so when people can eat more than than the service is designed to allow, they end up rightfully angry about it.

Unlimited LD is often like this as well, especially for land line phones. Very rarely are you purchasing truly "unlimited" long distance. You're purchasing a number of minutes that is higher than what the vast majority of people will ever use, but in your terms of use will be a clause stating something like, the company reserves the right to audit any LD usage above X minutes and assess extra fees for abuse of the service. The company is the final arbiter of what constitutes abuse.

I say it's not a bad practice in and of itself because without a control like this in place, heavy renters would end up getting preferential treatment over low volume renters who pay the same fee by nature of their renting habits, a reverse of the criticism being offered here. To put it in practical terms, think of how hard it can be sometimes for you, as a person who goes to the video store only a couple times a month, to find that new release on the shelf. People who hang out there and wait for the new releases to go out on display get first pick. Stores don't care about this when they're charging per item. They get the same level of income no matter who rents first. However, with a volume service based on monthly fees, low volume renters are less likely to resubscribe if they continually have to wait long periods of time for the movies they want.

I'm not really trying to defend Netflix or Blockbuster here, just saying that the target of criticism, imo, should be on the marketing, i.e. the lack of honesty in advertising. Unlimited anything is not a business model that works; it is just a marketing gimmick.

[Synnical]

34. Quite the apologist, aren't you?

[RoyGBiv]

37. No ...

Have anything of substance to add?

[Synnical]

45. No, I was in a pissy mood

Yesterday because my ISP was only semi-functioning.

I agree with your assessment and love your DU name.

Thanks, and my apologies.

[Poiuyt]

36. What happens if you periodically quit and then rejoin?

Would they see you as a new user, or just someone who has resumed their service?

[American liberal]

38. thanks for the info. I've definitely been throttled by Netflix. n/t

[Katherine Brengle]

39. I have had this problem lately-------

I use Netflix because I like to watch a huge number of documentaries and films that are out of stock in local video stores (also it's cheaper and more convenient) and I noticed in the past couple of months that it often takes a week or more for movies to arrive when I have returned the previous three.

I returned three movies on Wednesday of this week, and Netflix hasn't even reported receiving them yet. It's supposed to be a great deal, and really fast, but it isn't as fast as they say it is.

Then again, for $18, even if I only manage to rent 9 movies a month, it's still cheaper than Blockbuster.

[Deja Q]

40. Should be no troubles rending 12 per month.

3 movies per week; plenty of time to watch those and a frig of a lot more between the time it takes for the old one to get back and the new one to come out.

[Habibi]

43. Interesting!

The first year we had Netflix, we got a great turnaround--due, we figured, to the fact that there's a distribution center here in Rochester. Lately though, we've seen addresses on the return envelopes from as far away as CA. One thing we do is save up the return envelopes with our local distribution center's address on it and return 2 at a time in those, so I *think* we may be circumventing some of their throttling tactics. It makes us feel better, anyway. :-)

[Habibi]

44. Interesting!

The first year we had Netflix, we got a great turnaround--due, we figured, to the fact that there's a distribution center here in Rochester. Lately though, we've seen addresses on the return envelopes from as far away as CA. One thing we do is save up the return envelopes with our local distribution center's address on it and return 2 at a time in those, so I *think* we may be circumventing some of their throttling tactics. It makes us feel better, anyway. :-)