He wasn’t?
Bullshit. When most people joined Netflix, before the recent weaselly changes to the wording of their customer agreement, there was no mention that heavy users would have their usage throttled above a certain limit, or that low-volume users would get preference for high-demand films. That’s the key issues here—not Netflix’s right to make a profit, but its honesty and integrity.
The reason that Netflix became so popular in the first place was its offer of unlimited movies, and people signed up based on that promise. Whenever a business offers an unlimited amount of something at a fixed price, they have to know that they are going to make a loss on certain high-volume customers. It’s absolutely inevitable, whether the company is Netflix or an all-you-can-eat buffet, that a certain percentage of customers will make enough use of an unlimited service as to make them unprofitable.
So what such companies need to do, in working out their pricing structure, is make actuarial predictions regarding the number of likely profitable customers versus the number of likely unprofitable customers, and set their rates accordingly. If they find that their profit levels are not high enough, it means that they haven’t done their calculations properly. But it’s unfair, then, to change the terms of service for existing customers, because this gives the company all the benefits of an “unlimited” scheme (i.e., it attracts customers), with none of the possible drawbacks (i.e., possible unprofitable customers). They should be willing to eat the losses on a few high-volume customers while making profits on the rest of the people. This allows them to retain credibility and to live up to the spirit and the letter of their advertising.
It’s the same principle involved with rebates. If everyone who bought products with rebates actually took the time to send in the rebate forms and claim the money, companies would never offer rebates. They offer rebates on the assumption that a certain percentage of people will forget to fill out the forms, and thus help maintain their profit margin.
The issue here is not whether Netflix should be allowed to make a profit. The issue is whether they should be allowed to change their policy midstream, when the policy they are changing is the very one that attracted customers in the first place. Sure, certain renters will be only a break-even, or even a losing proposition for Netflix. But if they offered an unlimited service without planning for this, then the fault is all their own.
HA! Business is conducted to make profit. Don’t confuse honesty and integrity with business ethics (which has little to do withhonesty and integrity).
I’m sure they did a risk/reward scenario, and determined that they could pull off the policy change. One would presume that the mainstream Netflix users won’t be impacted by this, and the mechanics of revenue calculations don’t put emphasis on the fringe.
I’m well aware of that, but i’m optimistic enough to believe that this could change if enough people desired it.
I’m sure you’re right. I just hope that it bites them on the ass.
And i say this as a largely satisfied Netflix customer.
I think in the beginning thier business model worked fine. What they didn’t see coming was the influx of the affordability of burning your own dvds. As prices fell on the price of blank dvds, dvd burners, and dvd burning software the number of high volume (burn my own collection) customers probably went through the roof. As your customer base changes, so must your business model. Too many “high-volume eat-the-losses” customers popping up out of nowhere and you have to take some kind of action. I can’t blame them.
Maybe you’re right.
But if what they’re doing is so understandable, why did they keep their practice of throttling and preferential renting a secret until it was forced into the open by a class-action lawsuit?
Why not make an email announcement to all existing customers about the policy change? Or maybe email high-volume users to warn them that their selections would be regulated? Why not also post the policy change in a prominent place on their website? And why not remove the “unlimited” promise on their advertising?
As i suggested before, they wanted to have their cake (the lure of unlimited rentals) and eat it too (prevent people from taking advantage of what they’re advertising).
Some folks in this thread have correctly pointed out that if you don’t like Netflix’s policy, you can choose to quit. But this ignores the fact that, had Netflix had its own way, no-one ever would have known about the policy. People would have remained members, and new people would have kept joining, on the assumption that they were getting the advertised level of service.
Still, 3 at a time renters aren’t all burning illegal copies. If a household gets 3 DVDs, one may be for the kids and then two for the adults.
In our house it is 2 for kids and 1 for parents.
Exactly.
And this is another thing i object to: the idea that the Netflix policy is justified because we have a notion that heavy renters must be copying DVDs. It’s nothing but speculation in the first place—although i have no doubt that it happens—and it completely ignores the fact that it’s actually quite easy to get through three movies in one evening, especially if you have adults and kids in the same house. Hell, in our place it’s just me and my wife, and we’ve been known to go through two or three movies in an evening, especially on weekends.
I definitely think the policy is unfair. High-volume renters don’t seem to have affected the promptness of service to other customers, so the sole reason they would do this is to increase their profit margin. It’s not like they are helping out their low-volume customers who suffer because of high-volume renters. This policy change is 100% about profit and does not benefit a single customer. And what the hell - isn’t it illegal to change a contract without at least notifying the other party?
Too bad - yet another really cool corporation gone evil. 
:mad:
Reminds me a little of the story about banks in the UK, that are tightening up the payment dates for credit cards on people who pay off their balance every month, in a sleazy attempt to collect more interest. Except banks are already evil, and have always been.
Wouldn’t the other customers benefit by being higher in the queue? It’s not like they just take the discs and lock them in a cabinet for the extra time period.
Speaking as a heavy user (who doesn’t even OWN a DVD burner), I’ve noticed that for the past week or two, I haven’t seen even a single one-day delay. Maybe the bad press is getting to them.
If you can, try an experiment. I bought my dad a one-year subscription for Christmas, and the service really sucked. It took 4-7 days(!!) for them to check in a movie, yet magically he’d get a movie within 24 hours of getting the e-mails saying movies were on the way. We e-mailed them several times to complain, and they kept saying that they check in almost all their movies within 24 hours of receiving them.
Turns out they weren’t lying. As an experiment, he said he dropped off a movie at a different post office. They got it within 2 days. Repeating the experiment got the same result. Clearly, the delay was at our post office, not from their end. I don’t know what’s going on with our post office, but it seems like they’re holding on to out-going mail for some reason (until they have “enough” maybe?), because besides this mess I got an e-mail from a friend this week saying that she finally got the package I sent her 8 weeks ago. Yes, it’s overseas, but thats’ 3 weeks longer than they predicted when I mailed it…
Anyway, try dropping it off at a post office or mail box in another town and seeing if that makes any difference.