Netflix throttles customers . . .

[Sooner_Bob]

Have any of you netflix customers experienced this? (http://www.msnbc.msn.com/id/11262292/)

I haven't been with Netflix for quite a while and never really noticed something like the throttling/limiting of frequent renters. I most recently had an account with Blockbuster Online and really couldn't complain about their service at all.

The two free in-store rentals were great.

[SoonerWood]

I have blockbuster online - they throttle too...

Been waiting two weeks for one movie.

[Jimminy Crimson]

I have the 3 movie package with 'flix and haven't noticed much throttling. Sometimes I'll get 2 of my movies back sooner when I mail them all at once, but I get the 3rd a day or two later at most.

I'm not too inconvenienced.

[GDC]

I've noticed it with Netflix since I went to two movies at a time. I still like it because I never can remember the ones I really want to see when I'm at the video store.

[KaiserSooner]

I have the 3 movie package with 'flix and haven't noticed much throttling.

Same here.

[Stoop Dawg]

We three at a time and watch about two per weekend. We occasionally send two back at the same time and get the replacements at different times. It's not noticable. We always thought it was the USPS and/or inventory issues. I'm still not sure we get "throttled" at all.

While I certainly think they should have to change their marketing, I don't think the practice itself is too sinister. Or, let the heavy renters pay a little more to avoid the throttling.

[Sooner_Bob]

There were months when we'd get over 10 or so DVDs from blockbuster and then there were months when we'd get maybe 5.

There are people out there who have actually went so far as to create two separate accounts with Netflix to avoid this supposed throttling.

[SoonerWood]

The one saving grace for Blockbuster IMO, is the free in-store rental each week. With that and 5-10 online rentals per month, the $19/month fee is pretty decent, despite the crappy internet service I'm getting from Blockbuster.

[ultimatesooner1]

I believe I am getting throttled. I was getting a new movie in 2-3 days and now it takes a week plus

[RacerX]

http://www.cnn.com/2006/US/02/10/netflix.renters.ap/index.html

Netflix sends frequent renters to the back of line

Policy designed to reduce number of films rented for monthly fee
http://i.a.cnn.net/cnn/2006/US/02/10/netflix.renters.ap/story.netflix.jpg

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 (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 also have prompted incensed customers to share their outrage in online forums such as www.hackingnetflix.com (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."
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 (http://www.cnn.com/interactive_legal.html#AP). All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.

[NormanPride]

Just fyi, the show in the background of the image is Golden Boy, a silly/raunchy japanese animation title.

[RacerX]

He looks silly and raunchy. Well raunchy.

He's probably been throttling his customer....:norm:

[SoonerWood]

If they would just quit using the term 'unlimited' rentals, then it wouldn't be as much of an issue. The term "up to ## rentals a month" would be a bit more accurate.

[RacerX]

Bingo.