Netflix "throttling"
edith head
5,106 Posts
WTF, they penalize customers who return their dvds quicklyhttp://news.yahoo.com/s/ap/20060210/ap_on_bi_ge/netflix_throttling 'Throttling' Angers Netflix Heavy RentersBy MICHAEL LIEDTKE, AP Business WriterFri Feb 10, 2:24 PM ETManuel 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 wouldn't have a problem with it if they didn't advertise `unlimited rentals,'" Villanueva said. "The fact is that they go out of their way to make sure you don't go over whatever secret limit they have set up for your account."Los Gatos, Calif.-based Netflix didn't publicly acknowledge it differentiates among customers until revising its "terms of use" in January 2005 ??? four months after a San Francisco subscriber filed a class-action lawsuit alleging that the company had deceptively promised one-day delivery of most DVDs."In determining priority for shipping and inventory allocation, we give priority to those members who receive the fewest DVDs through our service," Netflix's revised policy now reads. The statement specifically warns that heavy renters are more likely to encounter shipping delays and less likely to immediately be sent their top choices.Few customers have complained about this "fairness algorithm," according to Netflix CEO Reed Hastings."We have unbelievably high customer satisfaction ratings," Hastings said during a recent interview. "Most of our customers feel like Netflix is an incredible value."The service's rapid growth supports his thesis. Netflix added nearly 1.6 million customers last year, giving it 4.2 million subscribers through December. During the final three months of 2005, just 4 percent of its customers canceled the service, the lowest rate in the company's six-year history.After collecting consumer opinions about the Web's 40 largest retailers last year, Ann Arbor, Mich., research firm ForeSeeResults rated Netflix as "the cream of the crop in customer satisfaction."Once considered a passing fancy, Netflix has changed the way many households rent movies and spawned several copycats, including a mail service from Blockbuster Inc.Netflix's most popular rental plan lets subscribers check out up to three DVDs at a time for $17.99 per month. After watching a movie, customers return the DVD in a postage-paid envelope. Netflix then sends out the next available DVD on the customer's online wish list.Because everyone pays a flat fee, Netflix makes more money from customers who only watch four or five DVDs per month. Customers who quickly return their movies in order to get more erode the company's profit margin because each DVD sent out and returned costs 78 cents in postage alone.Although Netflix consistently promoted its service as the DVD equivalent of an all-you-can eat smorgasbord, some heavy renters began to suspect they were being treated differently two or three years ago.To prove the point, one customer even set up a Web site ??? http://www.dvd-rent-test.dreamhost.com ??? to show that the service listed different wait times for DVDs requested by subscribers living in the same household.Netflix's throttling techniques have also prompted incensed customers to share their outrage in online forums such as http://www.hackingnetflix.com."Netflix isn't well within its rights to throttle users," complained a customer identified as "annoyed" in a posting on the site. "They say unlimited rentals. They are liars."Hastings said the company has no specified limit on rentals, but "`unlimited' doesn't mean you should expect to get 10,000 a month."In its terms of use, Netflix says most subscribers check out two to 11 DVDs per month.Management has previously acknowledged to analysts that it risks losing money on a relatively small percentage of frequent renters. The risk has increased since Netflix reduced the price of its most popular subscription plan by $4 per month in 2004 and the U.S. Postal Service recently raised first-class mailing costs by 2 cents.Netflix's approach has paid off so far. The company has been profitable in each of the past three years, a trend its management expects to continue in 2006 with projected earnings of at least $29 million on revenue of $960 million. Netflix's stock price has more than tripled since its 2002 initial public offering.A September 2004 lawsuit cast a spotlight on the throttling issue. The complaint, filed by Frank Chavez on behalf of all Netflix subscribers before Jan. 15, 2005, said the company had developed a sophisticated formula to slow down DVD deliveries to frequent renters and ensure quicker shipments of the most popular movies to its infrequent ??? and most profitable ??? renters to keep them happy.Netflix denied the allegations, but eventually revised its terms of use to acknowledge its different treatment of frequent renters.Without acknowledging wrongdoing, the company agreed to provide a one-month rental upgrade and pay Chavez's attorneys $2.5 million, but the settlement sparked protests that prompted the two sides to reconsider. A hearing on a revised settlement proposal is scheduled for Feb. 22 in San Francisco Superior Court.Netflix subscribers such as Nathaniel Irons didn't believe the company was purposely delaying some DVD shipments until he read the revised terms of use.Irons, 28, of Seattle, has no plans to cancel his service because he figures he is still getting a good value from the eight movies he typically receives each month."My own personal experience has not been bad," he said, "but (the throttling) is certainly annoying when it happens."
Comments
i am cancelling at the end of the month.
I guess I'm like a dream for Netflix. I'm on the 5/mo. program and on a good month I might watch 8-9.
Is there really a "very long wait"....I've seen "short wait" and "long wait" but I got the last two movies that said "long wait" pretty quickly actually.
Anybody fuck w/ that GreenCine?? Selection is awesome.
this is what the top of my queue has looked like for the past few weeks
Damn, that sucks. I can see why you'd be upset.
I wonder if geography has anything to do w/ it...ie, certain Netflix depots have more of things than others? I doubt it. Just sounds like SOP for a big corporation really.
For the few new releases I want right away, I usually have them by the weekend after they're released.
GOTDAMN you are getting screwed. I just added 40 year old virgin after seeing your queue and it says it's available NOW for me. This is because i've been lazy and have kept the same movies for the past 3 months
i am pretty sure that constant gardener is available for me now too
when blockbuster started their in-store unlimited rental plan, a chick that worked at the one by my house was telling me that a customer signed up for it and was making 10-15 trips in and out A DAY. he was obviously ripping them. this guy was stacking movies like chips in vegas. I wonder if the netflix customer in question who was renting 20 a month was doing the same thing. He should've just done the Blockbuster thing if he was.
i wish i knew how to rip DVDs. i even have a burner.
that's fucking bullshit. it's kind of weird though i watch a lot of movies per month but constant gardener and 40 year old version are both on my list without a wait. weird. i live real near the distribution center (san jose).
i have noticed a pick up in delays though between movies. used to take 2-3 days tops now it might take 5 days. and i only live like 100 miles from where they come from.
this is the kind of shit that will make them lose money not gain profits. i'm seriuosly thinking of canceling and going on greencine because of it (i wonder if greencine does the same thing though).
dave
does anybody use this? the site looks kinda sketchy (no dcast).
Whoah? Like that. Fortunate to be where I am I guess. They get it the next day, I get a new one the day after that, 95% of the time.
When I have rented a multi-volume series, listing Volumes 1, 2, and 3 in a row, Netflix will almost always send Volume 3 first, and then wait a day before giving me 2 (or 1 & 2 on the same day). My girlfriend called them on this (something I'd written off as a USPS thing) and Netflix denied it. Now I know it's true; she was right.
Here's how she got around it, say:
Priority / Film
1. Winter Light
2. Sledge Hammer, Season 1, Volume 1
3. Sword of Doom
4. Sledge Hammer, Season 1, Volume 2
5. Rififi
6. Sledge Hammer, Season 1, Volume 3
It's important to intersperse classics (which won't get rented as often by most subscribers) with the series to avoid the "throttling" here. My girlfriend is tuff.
I'm on the one at a time plan. The last 2 movies I rented I didn't even watch plus I kept them for about a month each time.
I have "Moog" right now which I genuinely want to see, but who knows. For some reason movies aren't a top priority for me. Blasphemy on Soulstrut, I'm sure.
I read that as, blasphemy on soulstrut is your top priority... I'm sure this is eerily close to the truth
incidentally, the moog documentary is weak. if you dont have much time for flicks; send it back and rent some cassevettes films or something.
seriously thanks for posting that article. I've noticed when I return 3 movies at a time Netflix always says they only get one, and then two days later get the other two. WTF mofo's, I mailed all three at the exact same time!? (cough)bullshit.
And they still don't have 'Hearts of Darkness' for rent.
$??
since a lot of the new dvds are dual layer, what do you do? Shrink them down and burn to single layer or be balleresque and use DL media?
It really is time consuming to shrink DL discs down, especially if you're planning on getting the most out of netflix and returning them super quick. Where do you find the time? I guess it helps if you're unemployed.
personally, I just hit the chinese malls and buy the boots. Great selection of foreign films, a lot of which are not on netflix or greencine. Best part is no time wasted ripping/burning. Also, a lot of these boots are high quality, some being DL exact copies of the commercial release.
and yes, I still buy legit dvd's if I am a big fan of a film.
Throw two discs in the same mailer.
I believe that still hasnt been released on DVD due to who-owns-the-rights bs. essential stuff.