Wednesday, March 01, 2006

Netflix "throttles" Frequent Users

If you haven't heard the term "throttling" yet, click here to read this story. How embarassing for Netflix that their algorithm has become public. It costs Netflix .78 to mail a dvd both ways. It doesn't take a genius to figure out that after a certain amount of rentals, they start to lose money on a customer. To curb heavy users, Netflix slows down their turnaround for these customers. Hey, Netflix should talk to bankers who have 80% nonprofitable customers! You would think there are far more people who rent only 5-6 per month than people who rent 22. This is just another instance of companies acting in a dubious manner. I might have to have a weekly rant based on false advertising. Netflix claims unlimited rentals for $17.99. As some people have now found out - unlimited is the wrong word to use. For now, they just changed the wording in their terms of agreement. I think a change will be coming in their pricing. They will probably have one price for up to X rentals per month and then have a premium ($1 per maybe?) for anything over X. Who knows where X will fall? I still may consider joining Netflix as I watch my fair share of movies on Direct TV's Pay-Per-View. But I don't think I've ever paid for 5 in the same month which would be the threshold for saving money. I would probably end up spending more time in front of the TV if I did join which is another great reason not to join. Also, I would think the Motion Picture Association would be interested in people renting 25 movies per month or turning around 3 movies in a day....they are probably burning one and I'm not talking about a fatty.

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