How To Hack Netflix

The Netflix DVDs-by-mail service gives fastest service to customers who rent the fewest movies. Here's how to be a heavy renter and still get your pick.

Mike Elgan, Contributor

January 30, 2006

4 Min Read

Netflix, the company that pioneered DVD movie rentals by mail, invented a great service. You pay a fixed monthly fee for the movies, and keep a "queue" of movies you'd like to see on their site. When you send a movie back in the pre-paid envelope, they send you another movie from your rental queue. You can keep movies for as long as you like -- there's never a late fee.

It's very common for new and popular movies to be unavailable immediately, so Netflix often bypasses the popular movie and moves down the queue and picks a less popular movie to send you.

It turns out that Netflix "rewards" customers who rent the fewest movies and "punishes" customers who rent the most, in terms of both movie availability and promptness of shipping.

This isn't speculation. This is Netflix's official policy, and is spelled out in the company's Terms of Service. Here's an excerpt:

"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 subscribers who receive the most movies may experience that (i) the shipment of their next available DVD 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 subscribers."

From a business standpoint, this makes sense. You give Netflix the same amount of money no matter how many movies you rent, so the people who rent the fewest movies are the most profitable, simply because postage is very expensive. Customers who return movies immediately each time (requiring Netflix to pay a lot more postage each month) force Netflix to lose money on that customer. If heavy renters become unhappy with the service (because, say, their top movie picks don't become available often enough), and choose to cancel their subscription, Netflix actually *benefits* financially from losing that customer.

So how can heavy renters get better service? The answer appears to be: Keep your queue short.

By giving Netflix a huge number of unpopular movies in your online rental queue to choose from, you enable the company's computers to bypass new releases that are higher on your queue, and send you older unpopular movies. Keep your online queue as short as possible. At any given time, keep only the movies you want next. Netflix has to send you something, so you'll get your choice every time.

Another alternative: Switch to Blockbuster -- if there's one nearby. Because of the popularity of Netflix's "never-pay-late-fees" system, Blockbuster has instituted a similar policy, both for by-mail DVDs and in-store movies. Note that this policy is voluntary for franchise stores, so it's possible that your local Blockbuster doesn't have it.

If you live near a Blockbuster and choose their in-store, one-price-for-all-you-can-watch service, you can opt to pay a set fee each month, and when you return a movie, you get a new one. That means you can watch 300 movies per month for approximately the same amount of money it used to cost to see five movies per month (a little over $20 per month). Blockbuster can afford to do this because YOU pay for delivery.

I've got a Blockbuster that's just a five-minute walk (or a two-minute drive) from my house. I've been known to watch and return up to four movies in a single day. It's fast, too. When you have an account like this, they don't need to see a credit card and, in the store I rent from, they don't ask even to see my Blockbuster card. They just scan both movies (the one you're returning and the one you're renting), then hand you the new one with your receipt.

By the way, if you're a Netflix customers looking for ongoing tips on getting the most out of Netflix, check out the Hacking Netflix blog, which I discovered while researching this article.

(This piece is from the Personal Tech Pipeline newsletter. Go here to subscribe)

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