Netflix and Sabotage

For years now, I've been a big fan of Netflix, but recently my friend Erin forwarded me a rather disheartening news story about their shady shipping practices. It seems that users who rent the most movies are put at the lowest priority for shipping by Netflix. In other words, even though we rent the most and pay more to be able to rent the most, Netflix makes sure we don’t get our money’s worth by delaying our shipping and preventing us from getting new releases while they’re still new. It’s actually part of a new official policy by the company.

I didn’t believe it at first, but I started to notice something was up when, just a few days ago, I checked my Netflix queue to see what movies would be shipping next. On the top of my list, and listed as “Available Now” was the Vince Vaughn/Owen Wilson comedy, Wedding Crashers. Despite the fact that the movie was available, and at the #1 position on my list, Netflix shipped me a movie that was much lower down. I thought that was a bit odd and I sent them an email asking why they had not shipped me the movies on my list in the correct order. Along with a semi-apology and 25% off discount on my next payment, they issued me a long letter which explained their shipping practices.

Here’s the part I found interesting:

In determining priority for shipping and inventory allocation, we give priority to those members who receive the fewest DVDs through our service. As a result, those members who receive the most movies may experience that (i) the shipment of their next available DVDs occurs at least one business day following return of their previously viewed movie, (ii) delivery takes longer, as the shipments may not be processed from their local distribution center and (iii) they receive movies lower in their Queue more often than our other members. By prioritizing in this way, we help assure a balanced experience for all our members. Those that rent a lot of movies get a great value and those with lighter viewing habits are able to count on our service to meet their limited needs.

It seems odd that they’d give priority to those people who are not heavy users of their product. These are the people who pay the least, watch the fewest movies, and don’t really use the service. This entire idea seems so backward to me. They’re giving the best service to their least loyal customers who pay the least amount of money. Doesn’t that seem like the opposite of what businesses usually do? I mean, that’s why we have frequent buyer cards at stores like Best Buy. The theory is that people who shop there the most are giving the company the most money, and probably turning other customers on to the store, and they will keep coming back in droves if you make them feel appreciated.

Sadly, Netflix seems to have a huge advantage in the online DVD rental market. To my knowledge, they have the widest selection of films and they rent unrated or NC-17 films, unlike Blockbuster’s online service. It’s unfortunate that another company doesn’t step up and challenge them because it seems that this advantage has gone right to their heads. Hopefully, with the rise of on-demand cable services, someone will offer another alternative to the totalitarian dictatorship of Netflix.

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