Netflix Penalties - Sitcoms Online Message Boards

savageamusement · 02-10-2006, 09:14 PM

Policy designed to reduce number of films rented for monthly fee

Friday, February 10, 2006; Posted: 6:46 p.m. EST (23:46 GMT)

Manuel Villanueva says his problem with "throttling" is that it contradicts the idea of unlimited rentals.

SAN FRANCISCO, California (AP) -- 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 a month to Villanueva's home in Warren, Michigan -- 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."
Changing the rules

Los Gatos, California-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 him. 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, Michigan, 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 has 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 a 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.
Customers catch on

Because everyone pays a flat fee, Netflix makes more money from customers who watch only four or five DVDs a month. Customers who quickly return their movies 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 -- 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 also have prompted incensed customers to share their outrage in online forums such as 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."

Netflix says most subscribers check out two to 11 DVDs a month.
Growing risk

Management has acknowledged to analysts that it risks losing money on a relatively small percentage of frequent renters. And that risk has increased since Netflix reduced the price of its most popular subscription plan by $4 a 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 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."

Copyright 2006 The Associated Press.

Janice · 02-11-2006, 02:53 PM

I was a member of Netflix for years, and throttling is a terrible problem. At first I thought it was my imagination. I would get three movies a week and was satisfied, then the movies started going into "wait mode" for a week or so.

I cancelled, then signed up again, and was treated like royalty again. Sure enough, within a few months, I was back to waiting endlessly for my movies. They treat new customers great.

I googled "Netflix sucks", and I found some message boards where people had gone through the same thing.

I'll stick to the video store or On Demand. I hate Netflix. It's no good for someone like me who only wants the hot new rentals. I'm not into foreign or obscure movies.

comedyfreak · 02-12-2006, 10:50 PM

I've noticed that my dvd's have slowed too, it is annoying. I only get one at a time, it's suppose to be unlimited. I only get 1 per week instead of 2.

LucyCompanyPhan · 02-13-2006, 12:39 AM

I really want Netflix but this turns me off. I think that its awful to do that to a really good subscriber. I mean, why else would you want netflix if its going to cheat you?

savageamusement · 02-13-2006, 02:53 AM

Well it worries me tht if you get/send back so fast they will KNOW your copying them if that is the case.

I knwo a couple of people with burners that get a seaosn or two of a show in, and copy it and send it back.
And i can't help but say to them DUH- you can't watch 24 hours of a show in 2 days??
I wonder if netflix keeps tabs on THAT

MsOrange · 02-13-2006, 12:05 PM

well, i'm DEF. not going w/ netflix now

Number 9 Dream · 09-02-2006, 11:34 PM

Ok, I know this an old thread, but I just signed up for a Netflix free trial (I hear so many people talking about it and I got curious...plus, I'm really big in to movies lately). So, yeah, should I just cancel after my free trial or do you think I should continue? Is Netflix reliable?

passionsfan79 · 09-03-2006, 06:44 PM

I have been with Netflix before and if I didnt return my dvds after my free trial was they were gonna charge me they didnt even notify me and had little problem with my checkin account. Least they could have done was let me know I would think.

Number 9 Dream · 09-27-2006, 05:55 PM

I am starting to notice the same problem now. I recently signed up for the one-at-a-time, unlimited plan after using my two week free trial, and I've noticed that my DVDs are coming more slowly. I'll be lucky if I get two movies a week now, whereas I used to get a movie every other day on my free trial!

I don't know....I might stick it out for another month or so, then cancel my membership. I am really enjoying the fact I am seeing all these greats movies I've been wanting to see, but I hate the fact I'm not getting movies fast enough (perhaps it's my own impatience, though). We'll see.

Quote:

Originally Posted by comedyfreak

I've noticed that my dvd's have slowed too, it is annoying. I only get one at a time, it's suppose to be unlimited. I only get 1 per week instead of 2.

Janice · 09-27-2006, 06:27 PM

I just signed up with Netflix for the third time in probably six years. I'm sure I'll regret it, lol. If I got two movies a week, I'd be happy.

Central Perk · 09-27-2006, 08:14 PM

We've had Netflix for a few months and I haven't noticed many problems.

Janice, have you looked into Blockbuster Online or any other type services?

theshark8777 · 09-27-2006, 08:37 PM

I've had netflix since march '03. Now I am usually not one to return my movies in a day or a week sometimes a month even. Rarely have I noticed the lag time. There are times its taken way longer for a movie to get here, but I think since I'm not really a heavy renter, it doesn't affect me so much. I would say try it, if you don't like it, cancel it. I really should cancel mine, I've had the same movies for a month an havent watched them.

Janice · 09-27-2006, 09:40 PM

Quote:

Originally Posted by Central Perk

We've had Netflix for a few months and I haven't noticed many problems.

Janice, have you looked into Blockbuster Online or any other type services?

I've heard that Blockbuster is better. As for Netflix, I always got great service for a while, then it would slow up. Hopefully this time it will be different.

Brian Damage · 09-27-2006, 10:44 PM

I signed up for the Rewards Program at my local Blockbuster and they offered me a free one month trial of Blockbuster Online. Not only do I get the free month, but I also get coupons for free in store rentals. So far so good with blockbuster.

Janice · 09-28-2006, 04:23 PM

Okay, I'm already pissed at Netflix, lol. I ordered a 3-disc, 6-hour, documentary about Abraham and Mary Lincoln.

Each disc is two hours long. I got e:mails today telling me that they shipped discs one and three. What's up with that? What about disc two?

If I get them tomorrow, I can't watch disc three. Naturally, I want to watch them in order. Nitwits. I was careful to list them in order in my movie que.

02-10-2006, 09:14 PM	#1
savageamusement Cutest Couch Potato Senior Member Join Date: Oct 21, 2003 Posts: 2,103	Netflix Penalties Policy designed to reduce number of films rented for monthly fee Friday, February 10, 2006; Posted: 6:46 p.m. EST (23:46 GMT) Manuel Villanueva says his problem with "throttling" is that it contradicts the idea of unlimited rentals. SAN FRANCISCO, California (AP) -- 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 a month to Villanueva's home in Warren, Michigan -- 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." Changing the rules Los Gatos, California-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 him. 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, Michigan, 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 has 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 a 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. Customers catch on Because everyone pays a flat fee, Netflix makes more money from customers who watch only four or five DVDs a month. Customers who quickly return their movies 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 -- 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 also have prompted incensed customers to share their outrage in online forums such as 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." Netflix says most subscribers check out two to 11 DVDs a month. Growing risk Management has acknowledged to analysts that it risks losing money on a relatively small percentage of frequent renters. And that risk has increased since Netflix reduced the price of its most popular subscription plan by $4 a 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 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." Copyright 2006 The Associated Press.
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02-12-2006, 10:50 PM	#3
comedyfreak Cheers! Forum Fanatic Join Date: Dec 14, 2005 Location: Sunny California Posts: 11,060	I've noticed that my dvd's have slowed too, it is annoying. I only get one at a time, it's suppose to be unlimited. I only get 1 per week instead of 2.
	__________________ www.facebook.com/comedyfreak

02-13-2006, 12:39 AM	#4
LucyCompanyPhan Hollywood Senior Member Join Date: Sep 25, 2001 Location: a far away place in sitcomville Posts: 2,254	I really want Netflix but this turns me off. I think that its awful to do that to a really good subscriber. I mean, why else would you want netflix if its going to cheat you?
	__________________ "Rather than love, than money, than faith, than fame, than fairness -- give me truth.”

02-13-2006, 02:53 AM	#5
savageamusement Cutest Couch Potato Senior Member Join Date: Oct 21, 2003 Posts: 2,103	Netlifx Well it worries me tht if you get/send back so fast they will KNOW your copying them if that is the case. I knwo a couple of people with burners that get a seaosn or two of a show in, and copy it and send it back. And i can't help but say to them DUH- you can't watch 24 hours of a show in 2 days?? I wonder if netflix keeps tabs on THAT

09-02-2006, 11:34 PM	#7
Number 9 Dream That '70s Girl Forum Veteran Join Date: Jan 18, 2005 Location: Long Island, NY Posts: 5,875	Ok, I know this an old thread, but I just signed up for a Netflix free trial (I hear so many people talking about it and I got curious...plus, I'm really big in to movies lately). So, yeah, should I just cancel after my free trial or do you think I should continue? Is Netflix reliable?
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02-11-2006, 02:53 PM	#2
Janice Retired Admin - Hollywood Swingin' Forum Legend Join Date: Aug 03, 2001 Location: Beantown Posts: 36,388	I was a member of Netflix for years, and throttling is a terrible problem. At first I thought it was my imagination. I would get three movies a week and was satisfied, then the movies started going into "wait mode" for a week or so. I cancelled, then signed up again, and was treated like royalty again. Sure enough, within a few months, I was back to waiting endlessly for my movies. They treat new customers great. I googled "Netflix sucks", and I found some message boards where people had gone through the same thing. I'll stick to the video store or On Demand. I hate Netflix. It's no good for someone like me who only wants the hot new rentals. I'm not into foreign or obscure movies.

02-13-2006, 12:05 PM	#6
MsOrange Bringin' Sexy Back Forum Veteran Join Date: Dec 27, 2004 Posts: 6,133	well, i'm DEF. not going w/ netflix now

09-03-2006, 06:44 PM	#8
passionsfan79 Proud to be Sara fan Senior Member Join Date: Sep 13, 2002 Location: MN Posts: 2,265	I have been with Netflix before and if I didnt return my dvds after my free trial was they were gonna charge me they didnt even notify me and had little problem with my checkin account. Least they could have done was let me know I would think.
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09-27-2006, 06:27 PM	#10
Janice Retired Admin - Hollywood Swingin' Forum Legend Join Date: Aug 03, 2001 Location: Beantown Posts: 36,388	I just signed up with Netflix for the third time in probably six years. I'm sure I'll regret it, lol. If I got two movies a week, I'd be happy.

09-27-2006, 08:14 PM	#11
Central Perk ~~~~~ Forum 4000 Club Member Join Date: Jan 10, 2002 Posts: 4,553	We've had Netflix for a few months and I haven't noticed many problems. Janice, have you looked into Blockbuster Online or any other type services?

09-27-2006, 08:37 PM	#12
theshark8777 Hats for Bats Forum Veteran Join Date: Jan 23, 2001 Location: northeast Ohio. Posts: 5,315	I've had netflix since march '03. Now I am usually not one to return my movies in a day or a week sometimes a month even. Rarely have I noticed the lag time. There are times its taken way longer for a movie to get here, but I think since I'm not really a heavy renter, it doesn't affect me so much. I would say try it, if you don't like it, cancel it. I really should cancel mine, I've had the same movies for a month an havent watched them.
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09-27-2006, 10:44 PM	#14
Brian Damage I'm Rich Bitch Forum Icon Join Date: Feb 03, 2002 Location: What Ain't No Country I Ever Heard Of...They Speak English in What? Posts: 63,107	I signed up for the Rewards Program at my local Blockbuster and they offered me a free one month trial of Blockbuster Online. Not only do I get the free month, but I also get coupons for free in store rentals. So far so good with blockbuster.
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09-28-2006, 04:23 PM	#15
Janice Retired Admin - Hollywood Swingin' Forum Legend Join Date: Aug 03, 2001 Location: Beantown Posts: 36,388	Okay, I'm already pissed at Netflix, lol. I ordered a 3-disc, 6-hour, documentary about Abraham and Mary Lincoln. Each disc is two hours long. I got e:mails today telling me that they shipped discs one and three. What's up with that? What about disc two? If I get them tomorrow, I can't watch disc three. Naturally, I want to watch them in order. Nitwits. I was careful to list them in order in my movie que.