CNN ran an article on their website on February 10th about the experiences of Manuel Villanueva, a Netflix subscriber. During the first months of his subscription, he was receiving the movies he wanted quickly. Because everyone pays a flat fee, Netflix makes more money from customers who watch only four or five DVDs a month. Customers who quickly return their movies to get more erode the company’s profit margin, because each DVD sent out and returned costs 78 cents in postage alone.

Netflix typically sends about 13 movies a month to Villanueva’s home in Warren, Michigan — down from the 18 to 22 DVDs he once received before the company’s automated system identified him as a heavy renter and began delaying his shipments to protect its profits.

The same Netflix formula also shoves Villanueva to the back of the line for the most-wanted DVDs, so the service can send those popular flicks to new subscribers and infrequent renters.

The little-known practice, called “throttling” by critics, means Netflix customers who pay the same price for the same service are often treated differently, depending on their rental patterns.

This is the same experience which caused me to stop using Netflix about two years ago. I was sending DVDs back the same day in many cases and a couple days later I’d receive my next batch. But soon I noticed they were taking longer to record that a movie had been returned, and longer to send new ones out, while the most popular films had longer wait times. I was annoyed because they advertise unlimited rentals in a month but in secret, do as they want. Annother pissed-off NetFlix customer initiated a class action suit against the company and forced them to acknowledge their deceptive practices.

That said, NetFlix still has a pretty decent service and the largest selection of movies and other DVDs for rental by mail, and I can still recommend it if you’re not planning on super-heavy renting. I next switched to Blockbuster Online and used them for about six months. I didn’t notice any signs of throttling by BlockBuster, but then discovered Intelliflix, which has an annual membership which is almost half the price of the other two, plus offers video game by mail rentals, and adult films on DVD.

For a side-by-side comparison of NetFlix, BlockBuster and Intelliflix, see the chart on this web site: BlockBuster, Intelliflix and NetFlix Comparison

 

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