Netflix compensates for out-of-stock titles
'Small' percentage of customers get free DVD rentals
By Danny King -- Video Business, 12/29/2008
DEC. 29 | Netflix this month started compensating for requests for some out-of-stock DVDs by sending customers free movie rentals of alternate titles.
The largest U.S. movie rental service via mail said on its blog yesterday that, in the case where a shipping center closest to a customer doesn't have a DVD that's listed at the top of the subscriber's request queue, Netflix, which has 55 U.S. shipping centers, will immediately send the next requested title—without counting it against the customer's allotted monthly DVD limit—from that shipping center while tracking down the top title at another distribution facility.
Previously, in the event when a top-requested title wasn't in stock at the closest shipping center, Netflix re-routed the order through another distribution center, usually forcing the customer to wait longer for the title.
Netflix spokesman Steve Swasey said the process change was simply an attempt to improve customer service and not a response to either subscriber-turnover rates or to competitor Blockbuster's attempts to take business away from Netflix. Netflix's third-quarter subscriber-turnover rate of 4.2% was equal to both second-quarter and year-earlier figures.
"It's just the right thing to do," said Swasey, who said a "very small percentage" of Netflix's 8.7 million subscribers were having to wait longer for their first movie choice because it was out of stock at the closest distribution center. "We don't have any plans to rescind this."
Netflix has been trying to boost subscribers by augmenting its by-mail service with an expanded inventory of titles through its streaming service and partnering with component makers to allow the more than 12,000 digital titles to be accessed directly from TV sets.
The company in October said its third-quarter profit jumped 30% from a year earlier as it cut subscriber-acquisition costs while boosting customers with its video-streaming service. Sales surged 16% from a year earlier, while its subscriber base grew 23%.
