The Dark Side of Netflix

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11/30/2005

Netflix Gift Subscriptions: The Gift That Keeps On…

If your are considering purchasing a Netflix gift subscription as a present for your friend or family member, here are some questions to ask yourself first:
  1. Will my friend watch enough DVDs to get a good value for the Netflix subscription fee?
  2. How is my friend going to feel when Netflix requires credit/debit card information when he or she tries to redeem the gift certificate?
  3. If my friend has a billing dispute with Netflix resulting from a billing error, lost DVD, etc., will my friend unconsciously blame me for the frustration involved in resolving the conflict?
  4. Will my friend remember to cancel his or her Netflix subscription in time to avoid getting charged for an additional month? If not, will my friend blame me for the charge?
  5. Since my friend is probably already eligible for a free two-week trial, is a one-month subscription much of a gift?
  6. If my friend really wants a Netflix subscription, why hasn’t he or she already signed up for the free trial subscription?
  7. Does my friend know about Netflix’s reputation? If so, will my gift be considered a good gift?
  8. Do I like getting gift certificates as gifts, or do I normally think they're kind of lame?

The most important part of gift giving is showing others how you feel about them. If you have answered all of the questions above and still believe a Netflix gift subscription is the perfect gift for your friend, go to Netflix and buy one now. If you think the gift of a Netflix subscription may backfire, then start browsing. There are many nicer gifts available for $18.

11/19/2005

Reed Hastings' Total Movie Hounds

In a recent interview in FastCompany, Netflix CEO, Reed Hastings had something to say about heavy users.

In Hastings' view, if you want to watch fifteen DVDs a month, you are a “total movie hound.” He also suggests, in a narrow sense, it might be better to get rid of the movie hounds, because they cost Netflix money. He then seems to add as a positive that the movie hounds stay with Netflix a long time.

This view is contradictory. If a fifteen-DVD-per-month movie hound costs Netflix money, how could having a movie hound as a long-term customer be positive?

Is Netflix exaggerating their costs? Why does Netflix hang on to customers they dislike? If Netflix is really losing significant amounts of money on certain customers, why doesn’t Netflix rework their business model so they can have a less adversarial relationship with their customers?

Here is the original question and response for your reference.

FastCompany: Who's your ideal Netflix customer?

Reed Hastings: A customer who's traveling and forgets to rent a movie and watches no movies in a month [might be], because they haven’t cost us anything and they've paid us $9.99 or $17.99. On the other hand, a customer who's a very light user is not going to stay with us very long. It's not that there's something wrong, that they don't like you, it's just that they aren't watching any movies. That's the number one reason for customer churn. On the other extreme we've got users that are total movie hounds -- they're watching 15 movies a month -- and in some narrow sense, it would be better to get rid of them because you're losing money on them. But then, they stay with us a long time. So there is no best customer. We try to make the experience work for all of them and we try to balance that.

An interesting exercise is when we run short of titles. We try to always be in stock, but sometimes we're not. Say we've got 1,000 copies and there's 5,000 people who want a movie. So maybe somebody's already gotten a lot of value for their $20 or $18 or $9 because they've watched a lot of movies while other people have hardly watched that many movies this month, so they haven't gotten enough value yet. Our sense of fairness is that if we run short, it goes first to the people who haven't gotten the most value yet in order to create a fair and balanced experience for our customers.


Click here to read the entire article.

11/02/2005

Class Action Settlement Registration Begins

The settlement registration process for Chavez v. Netflix, the class action lawsuit over claims of Netflix's false advertising, has begun.

If you were a paying Netflix customer before 1/15/05, you are part of the lawsuit class. You may visit www.NetflixSettlement.com to verify your eligibility and contact information. To receive a benefit from the settlement, you must complete the Claim Form Process at www.NetflixSettlement.com.

Unfortunately, the benefits of the Netflix settlement are ridiculously meager.

If you are a current Netflix subscriber, you will receive a free one-month plan upgrade. For example, three-out members will be upgraded to four-out plans for the month. Note that you must take the initiative to downgrade your plan at the end of the month. If you do not downgrade your plan promptly, you will be billed automatically for the upgraded plan at the beginning of the next billing period.

If you are not a current Netflix subscriber, you will receive a free month of Netflix service. (This will give Netflix one last time to take advantage of you.) As a former subscriber, you will have the option of a one-, two-, or three-out plan. Common sense suggests that most will choose three-out plans; however, take note that you must cancel your membership at the end of your free month. If you do not cancel promptly, you will be billed automatically for an additional month.

Click here to find more detailed information about the settlement and your various options.


Note: If you are currently suing Netflix or wish to sue Netflix in the future, you may not want to participate in this settlement. Consult with you attorney about your options.

Update: For opt-out information, go to http://www.netflixsettlementsucks.com/.