8 ms·

Wouldn't the ideal Netflix customer watch 0 hours (thus consuming none of the company's resources) while still paying their monthly subscription? :) OTOH active

Wouldn't the ideal Netflix customer watch 0 hours (thus consuming none of the company's resources) while still paying their monthly subscription? :) OTOH active viewers probably refer more friends and family to become new Netflix customers.

keebEz 8y ago
Ideal maybe, but if they want to maximize revenue they need to optimize around the marginal customer. Marginal customers most likely exhibit strong correlation between hours watched and retention.
rv-de 8y ago
interesting point. the problem is that no interaction means no data. and along the motto "if you can't measure what's important, you make important what you can measure" a more concrete metric needs to be used. even if - ironically - the optimization is opposed.
- mkagenius 8y ago
  Ofcourse not completely 0. Just enough to keep renewing.
  - rv-de 8y ago
    sure but if you optimize you have to optimize towards a number. Now that number is either 0 in this case or x which is close to zero. Now which x would you choose? And if you choose an x (let's say 47 minutes and 23 seconds) you'll lose data moving towards it.
- howard941 8y ago
  I was going to use that motto for a completely different email with my faraway manager but I found that the more popular version was "Measure what's important, don't make important what you can measure." It's attributed to Robert McNamara https://www.azquotes.com/quote/613247 https://www.azquotes.com/quote/613247
everdev 8y ago
In a hypothetical sense maybe, but in reality someone who's not using your product but still paying for it will shortly be an ex-customer.
miguelmota 8y ago
Ideally of course because it's more revenue and less operating expenses. Similar business model of a gym, where they want many subscribers and nobody coming in, while making it difficult to cancel the membership.
- dhruvarora013 8y ago
  I’m not sure that’s true. Unlike a gym which has a fixed amount of space, machines and resources, Netflix can distribute a fixed price production (tv/movie) infinitely. So it’s therefore in their best interest to make sure that customers are always bingeing.
  - miguelmota 8y ago
    Fair point and agree. It's not really comparing apples to apples. Netflix would want many binge viewers in order to retain their membership and get their friends to sign up to watch the same shows they're watching, while gym members don't necessarily convince their friends to sign up to their gym the same way they would if it were Netflix since it's more personal than social. There's a sweet spot between consumption and retention, just like how gym's don't like that one guy who's there for 12 hours a day taking up resources but would prefer someone who barely goes once a week which is enough for the customer to keep paying for the monthly membership.
jedberg 8y ago
Also ex-Netflix, and no, that was not ideal. We worried about those folks because they were the ones most likely to quit and the least likely to tell others about the service. The cost of actually delivering the video was so tiny it didn't matter. To put it another way, you could watch for the entire month continuously and it would make no difference to the bottom line. The videos were fixed cost licenses, not per view, so it didn't matter who watched it or for how long. The actual cost of sending bits over the wire was trivial.
- JoshuaRLi 8y ago
  > The cost of actually delivering the video was so tiny it didn't matter. To put it another way, you could watch for the entire month continuously and it would make no difference to the bottom line. Truly amazing times we live in!
  - phreeza 8y ago
    Hasn't the same been true for premium cable channels for a long time?
    - elcomet 8y ago
      I think cable tv is much simpler to deliver as you only have a few channels. Netflix has tens of thousands of videos so they can't just broadcast everything (I don't think cable TV is broadcasting all their channels either, I don't know how they do it in practice).
      - datenwolf 8y ago
        > (I don't think cable TV is broadcasting all their channels either, I don't know how they do it in practice) Actually they do. Just a whole lot of MPEG-PS, several of which multiplexed into a single frequency channel (sometime called transponder channel, even in the context of cable, although the term comes from satcom), and then on the order of hundreds of frequency channels between 100MHz to 1000MHz (roughly speaking, it depends on the regulatory domain, frequency allocations, and doesn't stretch all the way to the limits of the range).
kylnew 8y ago
I used to work at a company that called these customers ‘zombies’ because you were afraid that any next marketing communication would ‘awaken the dead’ and trigger an unsubscribe. They’d even go as far as to not send marketing emails to ‘zombie’ accounts that had been long time inactive. Bringing this back to Netflix, I imagine they would be concerned about a 0 activity customer leaving at any given time. Probably hard to forecast future revenue for them too. In related news, MasterCard announced they were going to start forcing subscription providers to contact you monthly with a bill so this might be the beginning of the end for easy revenue from inactive users.
- zulln 8y ago
  > They’d even go as far as to not send marketing emails to ‘zombie’ accounts that had been long time inactive. Do you know if this is common practise or even has a name? Would be interested in reading more discussion around it.
- samat 8y ago
  That recently announced change concerned only non-digital, real life goods & services.

keebEz 8y ago

Ideal maybe, but if they want to maximize revenue they need to optimize around the marginal customer. Marginal customers most likely exhibit strong correlation between hours watched and retention.

rv-de 8y ago

interesting point. the problem is that no interaction means no data. and along the motto "if you can't measure what's important, you make important what you can measure" a more concrete metric needs to be used. even if - ironically - the optimization is opposed.

mkagenius 8y ago
Ofcourse not completely 0. Just enough to keep renewing.
- rv-de 8y ago
  sure but if you optimize you have to optimize towards a number. Now that number is either 0 in this case or x which is close to zero. Now which x would you choose? And if you choose an x (let's say 47 minutes and 23 seconds) you'll lose data moving towards it.
howard941 8y ago
I was going to use that motto for a completely different email with my faraway manager but I found that the more popular version was "Measure what's important, don't make important what you can measure." It's attributed to Robert McNamara https://www.azquotes.com/quote/613247 https://www.azquotes.com/quote/613247

everdev 8y ago

In a hypothetical sense maybe, but in reality someone who's not using your product but still paying for it will shortly be an ex-customer.

miguelmota 8y ago

Ideally of course because it's more revenue and less operating expenses. Similar business model of a gym, where they want many subscribers and nobody coming in, while making it difficult to cancel the membership.

dhruvarora013 8y ago
I’m not sure that’s true. Unlike a gym which has a fixed amount of space, machines and resources, Netflix can distribute a fixed price production (tv/movie) infinitely. So it’s therefore in their best interest to make sure that customers are always bingeing.
- miguelmota 8y ago
  Fair point and agree. It's not really comparing apples to apples. Netflix would want many binge viewers in order to retain their membership and get their friends to sign up to watch the same shows they're watching, while gym members don't necessarily convince their friends to sign up to their gym the same way they would if it were Netflix since it's more personal than social. There's a sweet spot between consumption and retention, just like how gym's don't like that one guy who's there for 12 hours a day taking up resources but would prefer someone who barely goes once a week which is enough for the customer to keep paying for the monthly membership.

jedberg 8y ago

Also ex-Netflix, and no, that was not ideal. We worried about those folks because they were the ones most likely to quit and the least likely to tell others about the service. The cost of actually delivering the video was so tiny it didn't matter. To put it another way, you could watch for the entire month continuously and it would make no difference to the bottom line. The videos were fixed cost licenses, not per view, so it didn't matter who watched it or for how long. The actual cost of sending bits over the wire was trivial.

JoshuaRLi 8y ago
> The cost of actually delivering the video was so tiny it didn't matter. To put it another way, you could watch for the entire month continuously and it would make no difference to the bottom line. Truly amazing times we live in!
- phreeza 8y ago
  Hasn't the same been true for premium cable channels for a long time?
  - elcomet 8y ago
    I think cable tv is much simpler to deliver as you only have a few channels. Netflix has tens of thousands of videos so they can't just broadcast everything (I don't think cable TV is broadcasting all their channels either, I don't know how they do it in practice).
    - datenwolf 8y ago
      > (I don't think cable TV is broadcasting all their channels either, I don't know how they do it in practice) Actually they do. Just a whole lot of MPEG-PS, several of which multiplexed into a single frequency channel (sometime called transponder channel, even in the context of cable, although the term comes from satcom), and then on the order of hundreds of frequency channels between 100MHz to 1000MHz (roughly speaking, it depends on the regulatory domain, frequency allocations, and doesn't stretch all the way to the limits of the range).

kylnew 8y ago

I used to work at a company that called these customers ‘zombies’ because you were afraid that any next marketing communication would ‘awaken the dead’ and trigger an unsubscribe. They’d even go as far as to not send marketing emails to ‘zombie’ accounts that had been long time inactive. Bringing this back to Netflix, I imagine they would be concerned about a 0 activity customer leaving at any given time. Probably hard to forecast future revenue for them too. In related news, MasterCard announced they were going to start forcing subscription providers to contact you monthly with a bill so this might be the beginning of the end for easy revenue from inactive users.

zulln 8y ago
> They’d even go as far as to not send marketing emails to ‘zombie’ accounts that had been long time inactive. Do you know if this is common practise or even has a name? Would be interested in reading more discussion around it.
samat 8y ago
That recently announced change concerned only non-digital, real life goods & services.