Netflix stops charging customers who never watch • Hacker News Board

Re: Netflix stops charging customers who never watch

#41

Post by kovek » Sat, May 23, 2020, 3:50 AM UTC

raiyu wrote: post #12

I always wonder when a company does this if it is completely altruistic or if something else is going on behind the scenes. Maybe notifying customers gets them to reactivate, maybe if they resubscribe later they can charge more, maybe it’s better for financial reporting and projecting subscriber counts. On the other hand it could just be a rare moment of a company doing right by the customer.

I believe it's a good step to take as a company. They have the resources to do so. They will be ahead of other companies in that regard. Also, if it becomes a law that companies should _not_ charge inactive customers, Netflix will be ready.

Re: Netflix stops charging customers who never watch

#42

Post by wtvanhest » Sat, May 23, 2020, 3:52 AM UTC

mushufasa wrote: post #31

raiyu wrote: post #12

I always wonder when a company does this if it is completely altruistic or if something else is going on behind the scenes. Maybe notifying customers gets them to reactivate, maybe if they resubscribe later they can charge more, maybe it’s better for financial reporting and projecting subscriber counts. On the other hand it could just be a rare moment of a company doing right by the customer.

It's probably worse for them if customers cancel, because customers are unlikely to resubscribe to netflix having cancelled versus trying a competitor streaming service. Better psychologically to have an inactive account than to lose an account. (Also netflix would have to report all those unsubscribes to shareholders, but this way no one cancels and they're framing it positively as consumer-friendly). So if netflix…

They likely have to use the number of customers who are inactive and probable to request a refund, then use that estimate to calculate the size of a liability account which must be held on the balance sheet.

As it grows, that hits the pnl anyway so from an earnings perspective it doesn’t matter too much. Couple that with the cost of customer service calls etc. + the inactive customer count + the goodwill and the decision seems rational

Re: Netflix stops charging customers who never watch

#43

Post by MintelIE » Sat, May 23, 2020, 3:53 AM UTC

raiyu wrote: post #12

I always wonder when a company does this if it is completely altruistic or if something else is going on behind the scenes. Maybe notifying customers gets them to reactivate, maybe if they resubscribe later they can charge more, maybe it’s better for financial reporting and projecting subscriber counts. On the other hand it could just be a rare moment of a company doing right by the customer.

They can still count these customers as having active accounts when they talk business.

Re: Netflix stops charging customers who never watch

#44

Post by econcon » Sat, May 23, 2020, 3:56 AM UTC

raiyu wrote: post #12

I always wonder when a company does this if it is completely altruistic or if something else is going on behind the scenes. Maybe notifying customers gets them to reactivate, maybe if they resubscribe later they can charge more, maybe it’s better for financial reporting and projecting subscriber counts. On the other hand it could just be a rare moment of a company doing right by the customer.

It results in more support requests.

For example, often you hear angry customer who is like "can you refund me, I didn't use it this month, you can check your records"

Then request is passed on to some other employee who confirms that they really didn't use their account.

After that you issue refund.

In most cases, you end up issuing refund either way while in some cases customer forgets but he doesn't forget he got charged. So it counts towards negative experience even if a customer didn't complain about it.

If your company is here for long term then every negative experience matters.

Re: Netflix stops charging customers who never watch

#45

Post by spiralganglion » Sat, May 23, 2020, 3:56 AM UTC

raiyu wrote: post #12

I always wonder when a company does this if it is completely altruistic or if something else is going on behind the scenes. Maybe notifying customers gets them to reactivate, maybe if they resubscribe later they can charge more, maybe it’s better for financial reporting and projecting subscriber counts. On the other hand it could just be a rare moment of a company doing right by the customer.

We do this at my company, and it is purely for altruistic reasons. If people aren't happily making good use of my service, I don't want their money. That's the entire calculus.

Netflix is vastly bigger, granted, so who knows what machinations are afoot for them. But it is certainly believable to me that a company could choose to do something explicitly anti-greedy.

Re: Netflix stops charging customers who never watch

#46

Post by jaggederest » Sat, May 23, 2020, 3:56 AM UTC

zwily wrote: post #21

Slack does this too, every month. (Maybe it’s more common in enterprise offerings?)

Yeah I appreciated it a lot. They also prorate by active users, so if you're paying for 50 users and only 20 were active, you get a 60% discount. Super solid as a way of doing business.

Re: Netflix stops charging customers who never watch

#47

Post by akiselev » Sat, May 23, 2020, 3:59 AM UTC

safog wrote: post #32

sneak wrote: post #25

Earlier quoted context omitted.

They don’t do the same with EC2.

Early days of EC2 were chock full of stories like this - Of kids / engineers running up their CC bill because they screwed up in some way they didn't anticipate and Amazon CS would bail them out. I don't think this was a cynical marketing ploy designed from the top down either, it was a very natural thing for the company to be customer obsessed and trying to do right by them.

> I don't think this was a cynical marketing ploy designed from the top down either, it was a very natural thing for the company to be customer obsessed and trying to do right by them.

It's trying to do right by the legal and finance departments, not by the customers. Going after someone for anything less than a mid to high five figure AWS bill is never worth it because the legal costs are astronomical, the defendant probably can't pay in the end, and the cost of defending will drain the customer of any more resources that could have been spent on the cloud.

It's the cost of doing business. The choice is between trying to bleed a rock or a safe bet that LTV will be higher than the marginal cost.

Re: Netflix stops charging customers who never watch

#48

Post by smabie » Sat, May 23, 2020, 4:01 AM UTC

spiralganglion wrote: post #45

raiyu wrote: post #12

I always wonder when a company does this if it is completely altruistic or if something else is going on behind the scenes. Maybe notifying customers gets them to reactivate, maybe if they resubscribe later they can charge more, maybe it’s better for financial reporting and projecting subscriber counts. On the other hand it could just be a rare moment of a company doing right by the customer.

We do this at my company, and it is purely for altruistic reasons. If people aren't happily making good use of my service, I don't want their money. That's the entire calculus. Netflix is vastly bigger, granted, so who knows what machinations are afoot for them. But it is certainly believable to me that a company could choose to do something explicitly anti-greedy.

Really the only valid reason to do this is that the goodwill will help them make more money in the future. Strictly losing money with no upside in the future is in violation of the "duty of loyalty" that all corporate officers have toward shareholders.

Re: Netflix stops charging customers who never watch

#49

Post by dawnerd » Sat, May 23, 2020, 4:02 AM UTC

billfruit wrote: post #34

It would have been better if they don't collect the charges for a month if you haven't watched even a single thing on Netflix for that month.

That’d actually keep me subscribed longer I think. Right now I’ll batch stuff up and binge it all in a month and then cancel for another how ever months it takes.

Re: Netflix stops charging customers who never watch

#50

Post by saluki » Sat, May 23, 2020, 4:03 AM UTC

spiralganglion wrote: post #45

raiyu wrote: post #12

I always wonder when a company does this if it is completely altruistic or if something else is going on behind the scenes. Maybe notifying customers gets them to reactivate, maybe if they resubscribe later they can charge more, maybe it’s better for financial reporting and projecting subscriber counts. On the other hand it could just be a rare moment of a company doing right by the customer.

We do this at my company, and it is purely for altruistic reasons. If people aren't happily making good use of my service, I don't want their money. That's the entire calculus. Netflix is vastly bigger, granted, so who knows what machinations are afoot for them. But it is certainly believable to me that a company could choose to do something explicitly anti-greedy.

I'm amazed how many SaaS users are zOmBiE uSeRs, this is from working on client SaaS apps. One had about 20% of the users paying and not even logging in for months or even a year.

Props to Netflix for unsubscribing users who don't use the service.