Netflix: The Saga Continues
What have I gotten myself into? Apparently the exact week I decided to join Netflix makes the news with their new-ish shipping policy.
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 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.
Aha! I understand what they're doing, because every business has a profit margin they have to protect. It IS America, after all. But I do have a serious issue with the company advertising "unlimited" rentals, when they definitely have a system in place that limits certain people.
I'm still in the two-week trial, but my queue has 37 movies in it--the entire Babylon 5 and War and Remembrance. I'm betting that a queue that long identifies me as a "heavy renter". Maybe not, but I still think some things are suspicious. They sent my first two DVDs out of sequence, thus creating a day's "delay" in viewing time. They also have not recorded my first returned movie, even though it's been two days. Without showing the movie as 'received' in their distribution center, they are able to withhold my next movie shipment.
According to the linked article, each movie shipped costs $.78 in postage. By my calculations (okay, the calculations done by my calculator), if Netflix sends me more than 19 movies a month they've lost money. That's just on postage, and doesn't take into account salaries, product and other overhead. I'd imagine that they probably lose money on me if they send me more than 10 DVDs a month. That assumes, of course, that they are operating on a standard retail profit margin of fifty-percent.
Believe me, I understand. But what chafes is the unlimited they advertise. Why not just admit they have to cap all rentals? The marketing pro in me knows the panacaea of the word "unlimited" and the full impact it can have when someone is making a shopping decision. But the customer in me doesn't like to be lied to.
For more information on the nature of the algorithm used by Netflix, you can visit the Hacking Netflix website.
Update: Programmer Rod Hilton looks at the possible types of scheduling algorithms and has a few additional thoughts.