What are Netflix throttling & Blockbuster throttling?

Neflix throttling, Blockbuster throttling?

What is "throttling"? It’s a term that’s used by many critics referring to online DVD rental companies deliberately giving priorities to less frequent renters. Customers who rent DVDs very frequently are less likely to get the movie on top of their queues and shipments may come from alternative warehouses.

Netflix did not acknowledge the existence of "throttling" until the "terms of use" were changed in January 2005 - four months after a class-action lawsuit was filed alleging the company fail to deliver DVDs in 1 business as it’s promised. As a result of the "throttling" practice, heavy renter might have at least 1 business delay after the returned DVDs are received. Even though the DVDs are available at the local distribution center, the system will intentionally look for availability at an alternate location.

Some simple math here: it costs Netflix $.39 to ship a DVD each way. If you can rent 20 DVDs a month, it will cost Netflix $.39 x 2 x 20 = $15.6. and Neflix only charges you $17.99 a month. How much money can it make? $17.99 - $15.6 = $2.39. it’s definitely not enough to cover the day to day operation. So it will be ideal for Netflix to ship fewer DVDs out as possible in order to reach greater profitability. At a consumer’s point of view, it will be ideal for you to rent as many DVDs as possible to minimize the cost of renting each DVD.

The "throttling" practice only affects heavy renters. Most of users rent about 11 DVDs a month. The average cost of renting each DVD is only $1.63, compared to $5 per rental (plus late fees if overdue) at your local video store, it’s still a very good deal.