The Dark Side of Netflix

Netflix Underground is not affiliated with Netflix, Inc.

3/15/2005

To Netflix Employees, Shareholders, and Paid Posters

If, due to some obligation, you absolutely must post here in this open forum, please do us the courtesy of admitting who you are. Most of us are too smart to believe that random customers are so utterly enthralled with Netflix that they just can't help cruising all of the Netflix discussion sites to sing the company's praises. If Netflix were so wonderful, you wouldn't have time to spend hours posting about it all over the Web, because you'd be in your living room watching all of those new DVDs that supposedly arrive in your mailbox every day without fail. (It's difficult to argue with that point of logic, isn't it?)

30 comments:

the|one said...

If Netflix were so wonderful, you wouldn't have time to spend hours posting about it all over the Web, because you'd be in your living room watching all of those new DVDs that supposedly arrive in your mailbox every day without fail. (It's difficult to argue with that point of logic, isn't it?)Err.. if netflix sucks so bad, then how come you waste so much time building a blog just for whining purposes?

Why don't you join blockbuster or walmart so you will get as many DVDs as you want? Then maybe you won't have time to waste on ranting about not getting enough DVDs...

It's difficult to argue with this point of logic, isn't it?

Btw, for a 3-out/month plan, how many DVDs do you think you should get for it to be fair? 10, 20, 30, 40, 50, 60, 70 .. 100??

Editor said...

Dear the|one:

You’re very emotional about Netflix. What could have possibly inspired so much passion in you? What’s strange is that you used almost exactly the same words as a Netflix customer service rep I spoke with several weeks ago at (800) 279-5688. That’s odd.

That’s a good suggestion about signing up with one of Netflix’s competitors. I intend to soon. I hope you noticed that I have a directory of video-rental-by-mail companies on this site.

In answer to your question about how many DVDs would be fair on a 3-out plan, the answer would be the unlimited amount that Netflix advertises. Netflix is selling an unlimited 3-out plan. This means that I should be able to get 3 DVDs for every 3 I return. If I have a local distribution center and I am capable of watching and returning 6 DVDs per week, then I should get 6 DVDs per week. In reality, I would probably have trouble consistently watching 24 DVDs per month, but I should have that option since I paid for it.

If Netflix doesn’t think 24 DVDs is fair, then they should tell the customers what they think is fair. If Netflix thinks 16, 12, or 9 DVDs per month is the fair amount, then they should just come out, be honest, and tell the customers. That’s all we want to know: Exactly how many DVDs are we limited to on the so-called unlimited plan? Why does Netflix tell customers they are paying for an unlimited plan when they know very well that they are going to limit them? It’s unethical, deceitful, and probably illegal.

You can’t possibly win this argument. Unlimited means unlimited. It’s in the dictionary (http://www.m-w.com/cgi-bin/dictionary?va=unlimited). If Netflix does not want to provide unlimited plans, they should stop advertising them to unsuspecting people that are guilty of nothing but loving movies.

I eagerly await your response.

ghlu said...

Let's face it, blockbuster is catching up fast. I joined blockbuster after 1 month of NF throttling, and I just dropped NF last month. Why? because I was able to get the same number of DVDs on a 3-out plan from both companies. And guess what? I am paying $3 less with blockbuster! Blockbuster also give me 2 instore coupons so I can get new releases easier (it was damn hard to get new releases from NF). So NF can keep on throttling, but I am sure they are losing a lot of customers and getting bad reputation along the way.

Editor said...

Dear ghlu,

Thank you for your comments. I agree. If you’re getting a better deal and the company is treating you fairly, switching is an obvious choice. I hope Netflix competitors are paying attention to the growing population of disgruntled Netflix members. Maybe the competitors will be wise and learn from Netflix’s mistakes.

Thanks,
Warren

manuel said...

"the|one" said: "Err.. if netflix sucks so bad, then how come you waste so much time building a blog just for whining purposes?"

Makes sense to me. When service is bad you complain about it. I see your intent: Ridicule Warren and hope he and this web site go away. Fat chance. I don't blame you for being upset, seeing NFLX close at $9.43. Your comment about joining the competition...I have.

exp said...

What a naive post by the|one "Err.. if netflix sucks so bad, then how come you waste so much time building a blog just for whining purposes?"

When people feel that they are unfairly treated, they seek ways to retaliate, or vent. So having a blog, or posting on a blog is a very logical and fitting response to the feelings of unfairness we experience on a daily basis as a result of being a Netflix customer.

On the other hand, when people feel happy about a service, they rarely go to websites to share their joy. I even heard about marketing studies saying that a disgruntled customer talks to an average of 10 customers, whereas a happy one shares experiences with an average of 2. In short, people who have something to complain about go to complaint sites. I have no idea why a happy person would cruise these websites and make fun of, or belittle the ones who are venting.

Netflix has to realize pretty soon that they cannot give good service, and then take it away. I KNOW that Netflix can have a 2 day turnaround if they want to. I have seen it for 2 years. Now, it takes them a week. This is wrong. This is unfair. I really don't care about the number. I just see that I receive less movies than in the past, and I know that more is possible.

I have read several posts just like yours, trying to make me feel guilty as a customer. I don't think your post is helping your beloved company. Because I get mad at Netflix after reading your post. You cannot try to make the customer feel guilty for wanting the services they actually received for years before the throttling policy began.

I have also read posts saying that if we hate NF so much, why don't we change to a competitor. The competitors are not good enough yet. But we will, because the competition will eventually catch up. In fact, all these boards are a gift to Netflix. They are hearing the voice of people who are going to leave when there is a worthy competitor. If they think that only the heavy users will leave though, I think they are mistaken. When there are alternatives, many people, including the profitable ones will flee such a company.

Anonymous said...

I am generally happy with my Netflix service. This is actually my 3rd time around with them, and things have improved considerably since the first time I joined. I would say that 90% of the time, when I drop a movie off at the post office, it is noted as received by Netflix the next morning. In addition, the next movie in my queu is usually mailed out on the same day, and received the next morning (in my PO box), about 90% of the time. However, once in a while, approximately 10% of the time, my next movie is shown as scheduled for shipment on the following day. Why the delay? I don't want to be cynical, but I sometimes suspect this is intentional. This goes for delays in receiving my returned movies also. However, even with this occasional irksome problem, I still would not switch to blockbuster. I tried them already and they have problems of their own such as slow receipt of movies, and movies not being in stock. I am currently considering investing in Netflix since it seems like a win win situation with them. Either they win out over the competition and the stock goes up, or get bought out, and the stock goes up.

Editor said...

Dear Anonymous,

Before you invest in NFLX, take a moment to think about how corporate bankruptcy affects shareholders. Kmart and Enron shareholders got absolutely nothing in the end.

Netflix will probably get bought out, but don't assume that companies like Amazon aren't thinking, "Let Netflix go bankrupt, then we'll make our move."

If Netflix's reputation gets bad enough, no one will want to be associated with the brand.

Anonymous said...

Warren-

You claim that NFLX intentionally decieves its customers and uses unethical delay tactics.

I would like to point out that any shipping service is going to involve some of the things you mentioned as simply honest incidents. Scratched DVDs, and Broken ones as well are an understandable occurance in moderation.

Also, please remember it cost NFLX the same to ship you a broken DVD as it does to send you a non-broken one. I understand that you have had a number of problems with NFLX, but considering your high volume of DVDs recieved though them, it looks like a very small percentage to me.

As to unlimited DVD rentals, obviously there are physical limitations on any unlimited offer. You can't go to an all you can eat buffet and eat more than the store has of a particular product. Likewise an offer for unlimited tanning is limited by the times the business is open and the number of days in a month.

-Ztsmart@hotmail.com (NFLX investor/subscriber)

p.s. 1/4th of my life savings is in NFLX stock. I truely believe this company will become a large media company, and could grow ten-fold. Of course, I am sorry you have had problems with NFLX, but I think you percieve them as intentional when perhaps, they are not.

Editor said...

Dear Anonymous,

You are absolutely correct that it costs Netflix just as much to mail a broken DVD as it costs them to mail a perfect DVD. However, a broken DVD is worthless to Netflix. Why should they not use the worthless DVD to stall a heavy user and reserve the playable DVDs for their light users?

You are absolutely correct that any company that ships merchandise will have a certain percentage of problems. What is odd about Netflix is that new and light users get excellent service on almost every transaction; however, heavy users have some sort of delay or problem on the majority of their transactions. Why is USPS fast and efficient for light users and slow and incompetent for heavy users? It just doesn’t add up. The ratio of good transactions to bad transactions should be the same for all users regardless of volume.

As for the analogy of the tanning salon with limited hours, it’s true that you should not expect to go for tanning sessions more than the business hours will allow, but let’s say you paid for unlimited tanning sessions, went often, the owner suddenly told you that you used your membership more often than he anticipated, and he started forcing you to make all your tanning session appointments a week in advance while new and light users could still get a session with little or no wait. How would you feel about that?

As for the analogy of the all-you-can-eat restaurant running out of food, let’s say you went to an all-you-can-eat restaurant, paid your $10, ate a salad, and the waiter came to you and said, “I’m sorry, sir. We’re out of food. We’re keeping your money though. Come back next month. You might have better luck.” How would you feel about that?

As for your NFLX holdings, I don’t want to tell you how to invest, but most financial advisors agree that you should have no more than 5% of your portfolio in any given stock. Diversification will protect you from bankruptcies and 75% stock plunges.

If you eventually decide that you are not happy with your investment in NFLX, you might want to contact the dissatisfied investors that have filed class action lawsuits against Netflix. You can easily find information about this by searching Google.

I thank you for your comments, and I welcome the debate. I appreciate your honesty in admitting your ties to Netflix. I wish you the best.

Thanks,
Warren

Anonymous said...

Warren-

I don't have a lot of time right now, so I will try to respond to what I don't address later.

-Do you know for a fact that Net Flix is treating you differntly because you are a high-traffic user? If so, do they state that they may do this in the terms of service?

-As to your tanning bed question, I would evaluate things. If I was getting a really good deal consider the volume of tans I reclieve, I would put up with the inconvience of having to schedule them differently than other customers. I wouldn't like it, but I would understand that the busniness must do what it can to satisfy all of its customers.

-Assume you owned a resturant and you served an "All-you-can-eat" buffet. On one day someone starts coming in and eats an inordinate amount of food. Because you have a limited amount of food, other customers are complaining about having to wait for new food to be cooked, or in some cases that a particular food has been completely eaten out of stock. What would you do?

-If you were CEO of NFLX, what solution would you come up with to satisfy both light volume and high volume cusotmers while at the same time maintaining profitabllity?

-What is the shareholder lawsuit about? What are they accusing NFLX of doing wrong?

-As to my investment, not all financial advisors recomend diversification. Altough I am sad to hear that NFLX has lost and some others as customers, I am confident that this will not bring the company to bankrupcy--especially since it has no debt. Currently NFLX has $4 per share in cash, meaning there is no way NFLX could currently go below that. You really should consider buying some at these cheap levels :)

-Ztsmart@hotmail.com

Hey, do you know any sites like this about Cingular? I *%#$ing hate cingular.

Editor said...

Dear Ztsmart@hotmail.com,

Thank you for returning and posting your responses and comments. Below are my responses to your questions.

Netflix does cover themselves well with their terms of service. Since Netflix publicly admits that light-users get priority, I don’t really have any ethical concerns with their practice. I don’t like that way of doing business, but since Netflix is up front about it, it’s not wrong. If prioritizing customers were all that Netflix was doing, there wouldn’t be so much outrage. The issue is with all of the other Netflix tactics. I’m not going to rehash all of this since these points are detailed throughout this site.

I’m surprised you feel that way about the tanning salon scenario. I hope you got the point that the delays forced upon you by the owner were meant to limit your benefits while still charging you full price for an “unlimited” plan.

As for what I would do if I were the owner of the all-you-can-eat restaurant, I would order more food to satisfy my implied contract with the customers. If I were not willing to accept a lower profit margin, I would tell the unprofitable customer--before his next visit--that he would not be allowed to dine at the restaurant for the standard price, or I would admit to all of my customers that there is a cap on consumption. Regardless, I certainly would not advertise “All-You-Can-Eat” and then not live up to the promise. That would just make people mad and hurt the restaurant’s reputation.

If I were the CEO of Netflix, I would make it Netflix’s policy to publicly disclose the rental caps. If Netflix doesn’t want to send out more than __ DVDs per month to three-out customers, then they should just admit it. Netflix could simply inform users that they will probably not receive more than __ DVDs per month. If Netflix just admitted that, some customers would be turned off, but the deception would be over. Most customers wouldn’t feel violated anymore, and the anti-Netflix movement would wither away.

If you want to know about the class action lawsuits against Netflix, please find out more at http://www.google.com/search?hl=en&lr=&q=netflix+class+action+lawsuit.

I realize that not 100% of financial advisors recommend diversification; however, every good advisor I’ve ever heard names diversification as one of the most important investment considerations. Regardless, it’s your money, and you are free to invest how ever you choose. You make a good point about the cash reserves protecting the share price, but do keep in mind that lawsuits can unexpectedly deplete cash reserves. If you are absolutely sure that Netflix will never have to pay out any large judgments, then I guess you can consider your potential losses to be limited.

Sorry, I don’t know anything about Cingular. If they are operating unfairly, I would encourage you to act on your convictions and do something about it by warning existing and potential customers.

Thank you for returning to Netflix Underground. I’ve enjoyed this debate, and I appreciate your candor.

I want to remind you that the purpose of Netflix Underground is not to crush Netflix. This purpose is to pressure Netflix into coming clean and making changes in the way they treat their customers. Netflix could end this whole controversy at any time by simply apologizing to the customers and restating the corporate principles and operating procedures. Wouldn’t it be nice, if Netflix would just step up and end all of this? I’m sure that every one of us would rather spend our time watching movies instead of debating about Netflix.

All the Best,
Warren

Anonymous said...

Warren-

I am sure you realize that your solution of ordering more food (in the resturant example) or more DVD's (As per your answer to my CEO question), would cost more money. This would likely mean the price of the service would have to be increased.


I still believe many of the things you atrubuite to NFLX trying to throttle you are merely accidental. I believe that due to your high volume of DVD's rented you experince more problems, but doubt it is much more frequently with lower-volume users.

Of course, if I found out that Net Flix was purposefully sending out broken DVD's I would be extremely angry with them. But I am convienced they are not doing this. Doing so would serve no purpose other than waste money on shipping and anger customers like you.

Clearly NFLX could simply inform you that the next DVD in your queue has reached a low inventory level that only allows the remaining ones to be sent to light-volume users, and offer to send you the next-in-line in your queue. I am sure that while this might upset you, would not anger you as much (or cost as much) as sending you a broken DVD. Since this is obvious, I believe that NFLX would not allow broken DVDs to be purposefully sent out. It just does not make sense. Do you have any evidence that NFLX has done or is doing this purposefully.


NFLX has is in the unusual possition of having its profitablity inversely proportional to customer usage. Butm rather than refuse service to its high-volume users, I believe that NFLX does the best it can to provide you with a good cost-effective way of renting DVDs, while still giving top proirty to their ligher and more profitable users. In many cases, NFLX loses money on its high-volume users due to the cost of shipping, but they still try their best, when it would be more profitable to refund your money and terminate your account.

As to the unlimmited claim, have you tried the other services? Have you found the same thing to be true with them? Providing a limit to the DVD's out per month obviously would be detrimental to NFLX's business. Instead, NFLX has attempted to accomidate its higher-volume users with various plans, even one that is an 8 at a time plan. This would allow you to get many more movies per month and is still very reasonable price per DVD.

In all fairness I think it is a bit unreasonable to expect NFLX to sacrifice the service of the majority of its users or raise prices on everyone to increase inventory for a small percentage of the highest volume users.

As for the Lawsuit, it looked at it seems to me to be unfounded. After any stock's price falls as much as NFLX's has someone will throw a lawsuit up. I have great confidence in the intergrity of CEO Reed and CFO Barry. Insiders also own a whopping 30% of NFLX stock. That isn't a sign that executives have been doing any insider selling.

Finally, I must ponder whether your site is actually good for NFLX. your site could cause the highest volume users to cancel their subscriptions. Since NFLX loses money on them, this could actually increase the profit margins of the company. Of course, I would perfer you to stay a satisfied customer and perhaps increase to a 6 or 8 out-at-a-time plan so that both you and NFLX get what you both want--movies and profit respectively.

By the way, how can you watch that many DVDs? I had a hard time putting 30-40 movies in my queue, when they run out, I dont know if I will be able to find many more.

Anyways, why not give NFLX another try using a plan that can get you the number of DVDs you desire per month?

Regards,

-Ztsmart@hotmail.com

Editor said...

Dear Ztsmart@hotmail.com,

If you re-read what I wrote about the all-you-can-eat restaurant scenario, it will answer your latest question on this topic. Read it carefully--keeping Netflix in mind--and you will understand my point. If Netflix can’t operate honestly without raising prices, then let them raise prices. It certainly is better than all of the games they play under the current system. Netflix cannot expect customer loyalty if they are not loyal to the customers.

My earlier statement about the good-to-bad service ratio should answer your theory about heavy users noticing bad service due strictly to quantity. Here it is the statement again. Please make special note of the word ‘ratio.’ “What is odd about Netflix is that new and light users get excellent service on almost every transaction; however, heavy users have some sort of delay or problem on the majority of their transactions. Why is USPS fast and efficient for light users and slow and incompetent for heavy users? It just doesn’t add up. The ratio of good transactions to bad transactions should be the same for all users regardless of volume.” If you doubt this, please search the Web and review the numerous posts about shipping delays, lost discs, etc.

I don’t understand why you keep mentioning the broken DVD issue. This is a very minor point from a post I made weeks ago. I never stated that I ever received a broken DVD. I simply wrote, “Netflix DVDs sometimes arrive broken. Netflix always blames this on USPS. Regardless, each broken DVD that you receive will increase your turnaround on that DVD by a few days.” This is just a statement, and you shouldn’t read too much into it. Just read the statement literally.

As far as all of the dynamics of Netflix’s cost-profit models, that’s Netflix’s issue to deal with, and it doesn’t really matter to the consumer. Consumers want to be dealt with honestly and receive a good product at a reasonable price. If Netflix’s management can’t find a way to be profitable without misleading customers, they need new managers.

You might notice that I go out of my way to not mention Netflix’s competitors. Netflix Underground is not a comparison shopping site. It’s a site specifically about the way Netflix operates.

You’re right. Netflix Underground may actually be good for Netflix. The good news is that I’m not concerned with that. You should believe me. The goal is not to sink Netflix. The focus is to pressure Netflix into changing by arming the consumers with information. If that somehow helps Netflix indirectly, that’s fine with me. I don’t care that much either way.

As far as the quantity of DVDs I watch, I’ve never really discussed that, because it doesn’t matter. If you’re just asking because you’re curious, I don’t like television, but I do like movies.

Thank you for the proposal to get an eight-out Netflix plan. That suggestion made my day. In general, when a company is not dealing fairly with its customers, it’s better not to compound the problem by giving them more money. It’s baffling that some people get dissatisfied with Netflix’s service and then think a rational solution is to upgrade to a more expensive plan. If the pizza delivery guy showed up at my place two hours late with three pizzas, I wouldn’t say, “Thanks for the pizzas, man. We’re all really hungry now, so please bring us eight pizzas on your next trip.”

All the Best,
Warren

Anonymous said...

Warren-

I would even go so far as to say if NFLX were a contract-based subscription, I believe you should get a refund. But the fact is, it is not. Once you see how NFLX's service is, you are free to cancel if you decide it is not for you. Perhaps I would even say NFLX should give you a refund for your last month--if you were disatisfied with your service. However, I understand NFLX rarely gives refunds.

As an investor, I am concerned with any customer complaints, but I don't see NFLX as having done anything wrong here. As a customer, I hope you could understand that a company must do its best to balance providing good customer service to all of its customers, as well as being profitable (which is difficult for NFLX at this time).

Also, I noticed that you seem to think NFLX is delaying your DVD shipments. That is, holding them an extra day or so. I don't believe NFLX envelops are postmarked, but is there a way you could check with USPS and find out when your DVD was shipped to find out if NFLX is lying about its ship dates? (I doubt they are, but it is possible).

And one more point of note. You seem to think NFLX is doing this primarally to keep DVDs in supply for their lower-volume customer. I can assure you that IF NFLX is doing this, it is to keep the cost of shipping down, as that accounts for a huge percentage of their total cost.

By the way, I too wish NFLX's service were faster. I live pretty far away from their distrubution centers and it usually takes my DVD's 3 days to arrive. But I am still happy with the service as I am only paying less than 2 bucks per movie.

Just out of curosity here, how many of those competitors do you think will survive. NFLX is the only one profitable right now (Well, I haven't checked walmart, but its financials are difficult to sift though since they have that annoying little side business of retail). I've poured over Gamez N Flix's (GZFX) financial statements and they won't be around in a year. When these little companies start to fold up, people will want to go to a stable reliable DVD-by-mail company such as NFLX or BBI. BBI is currently losing money on its plan, and is caniblizing its in-store business. Although I think BBI will survive, they will have to raise prices, and have far less goodwill than NFLX does. Walmart will be out of this business in a matter of months and will sell its subscriber lists to BBI or NFLX.

Regards,

-Ztsmart

p.s. Do you have any estimates as to what percentage of NFLX subscribers are high-volume users

Anonymous said...

Warren-

One more question. Do you think you were getting a good deal when you got X (Where X is the number of DVD's you got in a month) for 17.99? Also what was your average cost-per-dvd?

Editor said...

Dear Ztsmart,

There is no reason to get into the cost-per-DVD discussion. Corporate honesty is a matter of principle; therefore, money is irrelevant. When a business starts lying to you in order to increase profits, you should not just give them a pass because you are still getting an okay deal.

As for proof of Netflix tactics, until a Netflix employee comes forward and blows the whistle on how Netflix operates, it will be very difficult to absolutely prove the practice of the dishonest tactics. Right now, we have to go on circumstantial evidence, and there is a lot of it. Don’t take my word for it. Search the Web, and you will find many Netflix customers that describe how Netflix service started getting slow a few weeks after they became heavy users. The most troubling thing is that these users point out that, as new or light users, their returned DVDs got checked in by Netflix a day after mailing. Shortly after these users became heavy users, their DVDs started taking days to get checked in by Netflix. Why would these people have fast USPS service at first and then suddenly see such an abrupt decline?

You may have misunderstood something I said earlier about Netflix reserving titles for light users. This is more of a DVD allocation issue, which is set up to favor light users. Netflix probably covers this with their terms of service, so it’s okay. The purpose of artificial shipping delays is primarily to reduce the amount of handling and postage expense invested in heavy users. Shipping delays almost always favor Netflix’s bottom-line because they are always charging customers the same amount regardless of how long it is taking to turn around DVDs.

As far as Netflix’s competitors go, I don’t care about them. I just hope that they are taking note of the Netflix customer backlash and what is happening to Netflix’s corporate reputation.

As for user statistics, Netflix is the only organization with any reliable data on how many of their customers are light or heavy. Since you are a shareholder, you would have more right to this data than just about any non-employee. Maybe you should request the data, and share it with us.

You still seem to be confident in the fact that the customer outrage is due to customer prioritization. Netflix has admitted to this, so it is not a secret or problem. The outrage is over all of the underhanded tactics explained on this site. If you have read this site, read the other Netflix customer complaints on the Web, and you still think that all of these tactics are imaginary, then there is nothing anyone can do to change your mind. The circumstantial evidence is there, and it is overwhelming.

Given your level of skepticism, the only way that you are ever going to see the truth about this will be to conduct your own test. Since you do not live near a distribution center, you will have to find someone who does and get that person to return DVDs quickly after they arrive. If you test this, you will find that the heavy user gets excellent service (three-day turnarounds) for the first month. After the first month, the various delays will begin and then gradually build until the user is throttled down to a very limited number of DVDs. Netflix says this is not true. Many Netflix customers say it is true. Somebody is lying. When one party is lying, the best way to discover the liar is to look at which party is profiting the most from the lie.

Thank you for your continued interest in Netflix Underground. I sincerely hope that you will consider researching this matter further on your own. If you do, you will be amazed at how the information on this site suddenly makes perfect sense.

Regards,
Warren

Anonymous said...

Warren-

I will contact the IR department, but I don't know if they will share their data on user volumes.

I am sure you can also agree that even companies that do nothing wrong attract websites and groups of angry customers.

I am still convienced that many of the things you talk about are not NFLX's fault. Some of them may be, indeed. I have a friend in San Antonio. He watches NFLX dvd's rather frequently and is probablly a medium or even high user. He has not complained about the service. For example, if a customer reports a DVD scratched, do you think NFLX should scrap the DVD? I don't. I think they should record the complaint and clean the DVD. If that DVD gets reported scratched a 2nd or 3rd time, then it should be scraped, but not just for once reporting.

I would be intersted in hearing what NFLX would say to you if you called and specifically asked if NFLX is delaying your DVDs being checked in, or other shipping delays. I would like to see how middle or even upper management would respond to your complaints. And also, if they would offer you a refund for any months to which they admitted to "throttling" you.

Did you contact NFLX when you felt decieved? If so, how did they respond and to what level of management did you go to?

Also, if NFLX were to advertise something like an "up to 30 X DVDs per month" instead of their unlimited plan, would that make you a happy customer? Or do you have other complaints as well?

-ztsmart

Editor said...

Ztsmart,

Yes, there are companies that do nothing wrong and still get attacked by their customers. However, due to the widespread Netflix customer outrage, Netflix does not appear to be one of these innocent companies.

I understand why you want to know about my personal Netflix experiences, but I really do need to stay out of that area. I’ve already spent too much time discussing my personal experiences, and I need to stop before this turns into a personal gripe site. I need to keep this site focused on how Netflix operates and how they interact with customers in general. My personal experiences have no more value than anyone else’s. That being the case, you should know some key points about how Netflix handles customer service complaints.

1) Netflix has several legalistic, vague, canned responses that they offer for almost any complaint..

2) Netflix will absolutely not admit that they are delaying check-in of returned DVDs. Netflix blames the delays on USPS.

3) Netflix normally does not give refunds, but they respond surprisingly well to threats. If a customer threatens to take action against them with a third party, Netflix often backs down and gives some sort of refund or credit.


I don’t really have any major complaints beyond Netflix’s practice of misleading customers in order to limit the flow of DVDs. (Although, that’s a huge issue.) Your particular example of Netflix offering a plan capped at thirty DVDs per month would be problematic, because very few people would have the opportunity to receive that amount on a three-out plan, and Netflix would not allow that many DVDs to go to a customer two months in a row. The idea is fine. The quantity is just way too high. A realistic rental cap at a realistic level of profitability would be perfectly acceptable. A better idea would be for Netflix to simply inform users that—due to customer prioritization—heavy users will probably not receive more than __ DVDs per month. If Netflix would just inform their customers about the realistic limits of their plans, customers would have no right to complain about being throttled.

On Netflix’s scratched DVD policy, they should attempt to repair scratched DVDs; however, they should not knowingly send out defective merchandise without offering customers compensation for the inconvenience of unplayable DVDs. (Note: Acceptable compensation would be a little more than what Netflix is already doing about this.)

I am surprised that your friend in San Antonio is a moderate or heavy Netflix user and still happy. How many playable DVDs does he average per month? What plan is he on? How long has he been a subscriber at this volume?

Thanks,
Warren

Anonymous said...

Warren-

I emailed IR. Ill let you know if I get a response if any.

By the way, I may have thought up the perfect solution.

Obviously NFLX would like to limit its exposer to exesive shipping charges from its high-volume users. I think NFLX could offer advertising on the inside of the part of the red mailer that is not returned. Companies that would love exposer to NFLX's customers (who have a lot of discresionary income) could be used to help offset shipping charges. Companies like LCD tv manufacture DELL, or Pappa John's Pizza should be willing to cough up a lot of dough perhaps even on a per coupon mailed basis. Then NFLX would have no reason to throttle (if they do indeed do so).

Ill ask my friend how many DVDs he gets a month.

-Ztsmart

Anonymous said...

IR has not responded. I think most companies seem less willing to provide information to their individual shareholders than they should be.

-Z

Anonymous said...

I think the advertising idea is great. At least it would be upfront and honest. I completely agree with Warren that I want to deal with an honest (or reasonably honest) company. That really is more important than the money. I want a great deal, sure, but I don't want to run the company out of business either. Of course they need to turn a profit. However, I don't want to support a company that uses shady tactics to increase their profit. The fact is that word of mouth is *very important* PR for Netflix and those of us who get a lot of value out of this service, well, we're the ones who are running around telling people to join up. Also, if they tick off customers like us, they are stuck with new users. Although they might be more desirable in the short term because they might be light users, we power users are the ones who get them all of their great publicity (or negative publicity if they decide to penalize us for using their service as advertised).

Anonymous said...

I really get a laugh when defenders of Netflix try to explain just how costly it is to mail out DVDs. First Netflix is a corporation. Stamps, mailings, shipping costs are all expenses. Expenses are liabilities. Expenses are deductable from income. Income is declared after deducting expenses/liabilities. Reported income does not include the cost of liabilities. IF Netflix is paying for postage they need new accountants.
It doesn't cost them, they deduct it and save the cost on taxes. That is if they even pay any.

Anonymous said...

Service from netflix has greatly deterorated since the contract with wall mart started. I have waited over 8 days for movie returns. I just have to wonder if netflix can handle the increased traffic and if there are penality clauses in the contract for nonperformance? If so, would netflix chose to screw their consumers or wall marts? I believe it is the former. I shall be leaving netflix at the end of this month. hello blockbusters.

Anonymous said...

To the above post. Yes since the Walmart thing every movie in my queue has an extra day added and all my returns have been delayed by a day. So it does look like the newer customers are getting preferential treatment.
But if you go with blockbuster look out. I live a few miles from a blockbuster shipping center and it is impossible to get anything from them in less than 3-4 days. Same thing on the returns. Amazing. My Postmaster told me not to accept any of their blaming the post office. They just simply lie about when they ship and receive.
Netflix also now admits they have a limit of how many movies are allowed to ship each day. And once that number has been reached you are delayed. Note the late in the day changes from "shipping today " to "shipping tomorrow". Try blockbuster if you wish. I opened an account with BB recently and out of 30 movies added to the queue 8 were available "now". The rest "wait" status. Even with Netflix slowdown they still beat BB at least in my area. Again very close to one of their original and main shipping centers. Good luck

Anonymous said...

I was out of town for all of September, so I returned no DVDs until the beginning of November. My first five returns took three days to arrive, then four days, now eight. I can view my rental history and watch the delays grow return by return. I could graph it. I mail my DVDs at a post office and after 6 days I report them missing, Netflix ships on the seventh day and on the eighth day they recieve my 'lost' DVD. Consistently. I am going to start sending them via certified mail for 30 days and then get an attorney to file a breach of contract suit.

I wish they were 'up-front' and state: so you want 25 DVDs a month? It'll cost you $X! Instead of these stupid unethical, illegal games.

Anonymous said...

On that previous post it should, of course read: "until the beginning of OCTOBER" not November.

Anonymous said...

I am getting tired of netflix's throttling and other delaying tactics. the last dvd i got had a return address about 50 miles from my home, in melville, NY, right on the nassau/suffolk border. my usual return center is in flushing, 5 miles from my nyc manhattan address. this is messed up and i am finally considering quitting after a year.

Anonymous said...

I was a blockbuster store movie pass holder, Switched to netflix on 2 week free trial. I signed up for 3 at a time. The first two weeks I managed to receive 12 movies and when the 3rd week started , after charging for a month, everything has slowed down. Now I am elated If I receive 2 movies a week.

Earlier, I would put my movie in the post-box, next day morning I would receive a receipt notice and same day evening the movies were shipped. Now the movies show up 2 days afterwards and the shipping is always next day or the day after.

I will let th current month run out and move to BB. I really feel angry because I know nertflix can turn-around movies in 2 days but intentionally now makes it 4/5 days, Wish I could do something more than just stop the service.

Bash said...

Warren -

Dude - Anonymous writes like a Netflix customer service rep. Keeps asking if you really expect to get unlimited dvds in an unlimited plan. Asks if you read the terms of service. These are just their tactics to divert attentiuon from the fact that they promise something they can't, or don't want to deliver.

Don't waste your time with him.