Netflix: An exhaustive study

Every now and then I latch on to something that's been bothering me, and scrutinize it to death. This seems to have happened yet again, as I have taken my notion that Netflix has a few business practices that aren't entirely above board a little too far.

I started to wonder about this little problem while browsing my favorite message board one day, Club Si. It seems several members noticed that the longer they were netflix customers, the longer it was taking for movies to get to them. I filed that in the back of my mind for a while.

Then, thanks to Nish and my uncle, I finally decided to sign up. It worked great, movies were shipping from New Brunswick, so I was getting them the next day. I could drop a movie in the mail on Monday, it would get there on Tuesday, and I would have the next movie on Wednesday. As my second month of membership comes to a close, however, I notice that I'm not getting as many movies as I used to.

It all started with a survey that netflix sent me about how quickly I was receiving my movies. Every time a new movie is sent to you, they give you an estimate arrival date. I always got the movie the day before that. In a brief lapse of higher brain function, I truthfully answered the survey. That was the beginning of the end. Now 2 things are happening. First, I'll send back on movie on a Monday, but according to netflix they don't receive it till Wednesday. Seems a little shady to me. The second thing is that movies listed with a "short wait" will routinely ship from another warehouse, always adding a day or two to the transit time. I now believe this is being done intentionally.

With my disenchantment growing, I started hunting around the net. One of the first sites I found was an extensive blog that details just about everything about the netflix website itself. There is an interesting section about wait times though. The conclusion seems to be that when a customer first signs up for the service, they are given priority in the system, so all the movies are "available now". As times goes on your priority goes down (they don't have to woo you anymore, they already have you) and wait times go up. This would seem to work fine for netflix, except for the fact that they run a subscription-based service that must be constantly renewed.

Through Nettle's sight I found this site, featuring a quasi-scientific study of customer priority at netflix. While I haven't read the entire study, the conclusion is that the more movies you rented the previous month, the lower your priority for the following month becomes. To put it another way, the more movies you rent, the less money you've made for netflix (because netflix always receives a flat flee while the number of movies rented varies), the more netflix punishes you the next month.

For instance, in my first month with netflix, I rented 21 discs. So far this month, I've only rented 6. To date, 3 discs have taken the phantom "extra day" to get back to the warehouse, and 1 disc had to be shipped from a different warehouse that took 4 days to get here. Admittedly, I haven't been as vigilant with my movie watching this month, but come on. It's halfway through the month already. The true test will be next month when we'll see if my priority has gone back up. If I'm able to alternate between high priority and low priority I'll be happy, but not if things stay like this.

I realize that netflix only has so many copies of each disc, but they should at least be up front about how the do business. Ideally, I feel it should be a first-come, first-serve priority (if a disc is available when it reaches the top of the que, you get it). People shouldn't be punished for being loyal customers. I also feel that netflix has to realize that they aren't going to make money on everyone. There will always be people like me, who vigilantly watch and return movies to the point where it probably costs netflix to have me as a customer, but I'm sure I am in the minority. And if I'm not, and it's too much for netflix to bear, change the price structure, but don't resort to these shady "shipping delays" and "warehouse problems".

All that being said, even I end up with only 12 movies rented this month, I've still only spent $2 per disc, so I won't be canceling my membership quite yet.

And that, my friends, is what I'm sure is more information than you ever wanted about netflix.