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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

• ukoki 6y ago
  Just one theory: If I go to a restaurant I expect they'll give me to-go box if I ask for it; If I accidentally buy they wrong size shirt from a high-street retailer, I expect to be able to return it. If a business doesn't meet these generally-agreed on "consumer expectations" they may be complained about viciously. If Netflix can successfully normalize "only charge me if I use the service" into a basic consumer expectation for subscription businesses it might cost Netflix a little, but it might cost their competitors a lot more.
  • oarsinsync 6y ago
    I hadn’t considered this angle and absolutely love it. I hope this becomes true.
  • bschne 6y ago
    Interesting argument, I am curios though why this would hurt other streaming services more than netflix? Is this based on an assumption like "netflix has more content so less people will not watch anything for a few months than on [other platform]" or something like that?
    • Klathmon 6y ago
      It could also be an attempt to beat the innovator's dilemma. By putting a policy in place like this they're internally much more incentivised to ensure they are putting out consistently good content.
    • ukoki 6y ago
      Netflix competes with cable TV which has famously infuriating billing practices. they also compete with any “digital entertainment” you might choose to spend money on instead of Netflix: Xbox live, Spotify etc
• larntz 6y ago
  This is an excellent question! I wouldn't be surprised if notifying someone that their subscription is cancelled due to inactivity would cause them to suddenly value their subscription. I bet you're right.
• cortesoft 6y ago
  Amazon did this for me back in 2005 when they introduced Prime. I used the free trial for an order (to get it in two days), but then didn't order anything else and forgot to cancel. They sent me an email that they weren't going to charge me because I hadn't used it, but I was free to sign up in the future if I decided I wanted it. It was so refreshing, it made me a lifelong customer.
  • sneak 6y ago
    They don’t do the same with EC2.
    • safog 6y ago
      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.
      • akiselev 6y ago
        > 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.
      • anonymoushn 6y ago
        At the request of an EC2 support staff, I left some machines running to help them debug an issue where machines became unreachable within minutes of being created. I was erroneously charged for this. Throughout the years Amazon has variously said that they could not refund me because they had no records from this time period or offered me AWS credits. I expect to the situation to never be resolved.
• mushufasa 6y ago
  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 incentives people to people keep their accounts, they remove the friction from what would otherwise be a high-friction resubscribe. As long as netflix believes they can get people to come back for an occasional exclusive content hit-show, then they can reactivate the payments for a while.
  • wtvanhest 6y ago
    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
• kovek 6y ago
  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.
• MintelIE 6y ago
  They can still count these customers as having active accounts when they talk business.
• econcon 6y ago
  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.
  • jfoster 6y ago
    Probably also significantly reduces their chargeback costs.
• spiralganglion 6y ago
  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.
  • smabie 6y ago
    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.
    • mehrdadn 6y ago
      > Strictly losing money with no upside in the future is in violation of the "duty of loyalty" that all corporate officers have toward shareholders. I'm pretty sure that's just the absurd HN take on the "duty of loyalty", not an actual fact. Also, if you absolutely need a pessimistic reason, I imagine it would avoid headaches with customers complaining (regardless of who's right).
      • bsanr2 6y ago
        This. If someone is paying for your service and not using it, perhaps they have an inaccurate idea of what your service (and their payments) actually entail. If that's the case, then you have a customer who's going to come to you eventually to figure out what the hell they've been paying you for all this time, and/or in need of a particularly expensive crash training course (because it's coming out of nowhere). Better to drop them and then onboard them again as new customers (which, functionally, they would be) if they decide to come back. There ARE industries that survive on the, "One loud sign-up multiple silent payment extractions," model; everyone hates them and they have to ju~st skirt regulations to get by ("I'm sorry, we didn't receive your cancellation, please fax it with proof of necessity, last month's payment is still due.").
• innagadadavida 6y ago
  This is definitely the right thing to do. The move is also brilliant in two ways: 1. More Netflixsters will realize now and start watching again. 2. Netflix is getting a lot of free publicity. The Combined value of these two is worth far more to Netflix than whatever pennies in revenue they’ll lose.
• jfoster 6y ago
  I'm guessing that "if you stop watching, we stop billing" helps a lot in getting users to sign up for a trial with their credit card. Not sure if it's been tested, but it does seem like a reassurance that might go a long way.
• goodside 6y ago
  At some point the cost-benefit calculus has to flip. Users on the extreme right-tail of the months-paid-but-unused distribution are a negligible amount of revenue but very likely to complain when they noticed they’ve paid for years of unused service. If the company refunds these users as a matter of policy, it creates uncertainty in the accounting and negates the value of them being allowed to keep paying. If no such policy exists, it creates a reputation risk: “YoungPersonApp bilks $2000 from grandma with Alzheimer’s” “Doing the right thing” and “managing reputation risk” are often indistinguishable. The details of Machiavellian self-interest can be difficult to codify, so a semi-sincere effort to do the right thing can be safer.
  • kcolford 6y ago
    This is the essence of Dale Carnegie's argument why we should just do the right thing. It's always a hedge against losing reputation and that is always more valuable than the marginal benefits gained from the wrong thing.
• m463 6y ago
  It could just be the golden rule. It could be canny business sense. It could be both. in a similar vein, Ikea umbrellas are discounted when it rains.
• karatestomp 6y ago
  It’s softer than a full cancellation, I bet. Cancellations were probably going the wrong way and this lets people “go inactive” without cancelling—coming back is just opening Netflix and starting a video, rather than re-subscribing. They want you not to have a reason to unsubscribe.
• ponker 6y ago
  Pure altruism can be a great business and life strategy. How does someone feel when they realize they’ve spend thousands of dollars on a Netflix account they don’t use? It’s not in Netflix’s interest to have people out there hating Netflix. Ever see a person who was just really great to everyone and the world seems to have rewarded them for it? That doesn’t always happen but sometimes it does.
• TeMPOraL 6y ago
  My guess is that a big part of the reason is that Netflix realizes people are switching between streaming services all the time - this quarter they're paying for Netflix, next quarter they're paying for HBO Go, etc. So they don't want to be remembered as the service that's hard to cancel, otherwise people may be reluctant to come back to them.
• thiht 6y ago
  I read once that for Netflix, these users were not seen as "easy money" but as a genuine problem, because that's revenue they can't count on to last. Their action both removes a problem on their side and is good for customers. Win-win. So probably not entirely altruistic (nothing is), but at least partly.
• TheRealDunkirk 6y ago
  Does anyone else find it unfortunate that this entire topic is devoted to the fact that we find that a company being ethical about their business practice is so out of the ordinary, and we're spending a lot of energy guessing what nefarious motivation might lie behind it?
  • EmilioMartinez 6y ago
    It sounds like the most relevant thing to discuss too, and guessing that is always a good exercise too keep yourself on your toes. Large institutions mask often mask their intentions in ways very difficult to figure out, so maybe a thousand people can put it together. It sounds like misplaced effort only as long as nothing comes out.
  • andrewon 6y ago
    Making money is the reason why a for-profit business exists. Keep charging customers because they neglect to cancel is unpleasant, but can hardly be qualify as unethical.
  • renewiltord 6y ago
    Yeah, HN's classic cynicism is in full effect here. The truth is that companies are made of people and very often the people just want to make a good thing that's nice and works well. My favourite is Gusto. Why is Gusto so good? I only use it twice a year or so, the guy buying it isn't the guy using it, and the principal value in their business is integrations not UX. Well, Gusto is good because they want to be good. I'm happy with that explanation.
• dehrmann 6y ago
  > On the other hand it could just be a rare moment of a company doing right by the customer. Arguably, doing right by the customer is selfish because it looks out for you business in the long term.
• achillesheels 6y ago
  This is a great opportunity to thank Unbounce (https://unbounce.com/ https://unbounce.com/) - Years ago I was helping set up patient recruitment for a clinical research lab and forgot to cancel the sub after it was over. I got on chat about a week after the cycle ended and had that one billing cycle refunded. It was only $40 or something but the impression has lasted years probably in relation to all the horror stories I’m reading here.