The Frugal Court #1: Netflix
Photo by Marit & Toomas Hinnosaar
Welcome to the first entry in my “Frugal Court” series, looking at the frugality of various products and services. Up this week is Netflix, the popular video-rental-by-mail service with the iconic red envelope. I have been a subscriber for the last year under the $8.99 plan, which offers unlimited one-at-a-time DVDs. Should I continue subscribing?
The Frugal Indictment
The charge against Netflix is simple — that, for most people, unless you are watching large numbers of movies each month, it is simply not worth the monthly rental fee. Even if you watched every movie as soon as you received it, you can not hope to get much more than four movies a month. The best case scenario, then, brings about a per-movie cost of around $2.25.
I, however, have not come close to getting the most cost-effective return from my membership — it sometimes takes me quite a while to watch a movie. I am not going to embarrass myself by stating the longest amount of time I have held on to a Netflix DVD, but suffice it to say that I kept “Lost, Season 1, Disc 1″ for a while.
So that brings about the first question: How many movies am I watching under the Netflix plan? Does it justify the monthly cost? If i am only watching one movie a month, there are probably better options. In my personal case, I am watching maybe three movies a month, which puts Netflix in a very gray area.
The second question, however, I think often gets overlooked — Am I watching more movies than I really otherwise would want? Just as how people with Costco or Sam’s Club memberships often buy more than they otherwise would, you can’t simply look at Netflix as a good deal if you end up watching more movies than you would if you didn’t have the Netflix membership. Are you falling victim to “Netflix-guilt” – the pressure to watch a disc quickly so you can get a new one sent out? I know I have.
The Frugal Alternatives
Of course, one of the most important considerations in The Frugal Court is where the service stands in relation to other alternatives. While it would be easy to say that movies are a luxury that can be done without, that doesn’t seem like a very fun option. What alternatives to Netflix exist?
One possibility is Redbox, the human-less DVD kiosk service that allows you to rent DVDs for $1. It has a decent selection — largely popular newer titles –and it is hard to beat the $1 price. Unfortunately, there is not a convenient Redbox kiosk near my location. If there were, I might have to seriously consider Redbox. The best part about Redbox is that there are frequently coupon codes out there that will get you a free rental.
Another possibility is the local library. While this varies by library, many now offer DVD rentals for free (or for a nominal charge). My local library, for example, charges a dollar or two and has an ever-growing collection of movies. This, too, is a pretty good option, and definitely worth checking out.
Finally, the internet provides a growing number of alternatives. Sites like Hulu have large amounts of television episodes, and some movies, online for free, while online stores like Amazon.com and Apple iTunes let you “virtually rent” movies for a few dollars. If you are only renting one or two movies a month, this might not be a bad alternative.
The Frugal Defense
I’ll be honest. For some reason, I have always loved Netflix, and can’t really imagine giving up my subscription, even if I am not making the most of it. Crazy, right? Their customer service is top-notch — no email or form responses; they immediately put you through to helpful and proactive customer service representatives. I have always been a satisfied customer, and it seems like that should count for something.
Furthermore, I think there is something to be said for how hassle-free Netflix makes watching movies. It is always easy to get a movie within a few days, no driving to the video store or kiosk required.
They also have a great recommendation system, which has done an amazing job suggesting new movies for me. The added surprise of new recommendations has made movie watching more fun (for more information on Netflix’s impressive recommendation system, check out this article from a recent New York Times magazine).
One of the most exciting parts of Netflix recently, however, has to be the On-Demand feature, which allows you to watch selected television shows and movies on your computer streamed instantly under your membership. I was thoroughly unimpressed when it first came out, but the technology and selection have both improved dramatically. Netflix really seems to be pushing this, as they have recently announced partnerships with X-Box, TiVo, Starz, and more, to expand the reach and features of their on-demand service.
My Personal Verdict
Last week, I was all set to cancel my Netflix subscription and try out alternative ways of getting movies for a while. But then I saw my first episode of the wickedly-funny television show 30 Rock; I was hooked instantly and wanted more. Guess what? Netflix’s On-Demand service had every episode that was out on DVD available for instant streaming. Thanks to Netflix, I was able to watch two seasons of 30 Rock without leaving home.
Since then I have poked around the online features some more, and I am curious to see how it develops, as it seems like it has quite a bit of promise. So I have decided to stick around for a few more months and see if I make use of all of this.
Any of you use Netflix? Have you found it worthwhile, or have you left for greener pastures?
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I’m on the same plan as you and my husband and I have our date night every week at home, where we watch our Netflix movie of that week. The alternative to this for us would be going out to a movie theatre, so we have a substantial savings there.
We too, though, absolutely love the Watch Instantly feature. We watch two episodes of the Office a day when we are winding down. We’re already on Season 3 and 30 Rock will be next. I honestly believe that this feature alone makes Netflix worth it!
I dropped my subscription to Netfilcks when I hit that “movie I never watched” that sat at my house long enough to buy it…..
But I’m thinking about picking it up again (I got a ‘come back’ offer in the mail the other day). When I was deligent about watching, I really did enjoy it. I like Hulu, but their selection just isn’t big enough for me – though I AM working my way though all the seasons of Highlander that they have up right now!!
We have had Netflix for about a year. Before they change to unlimited on demand I’m not sure that we got our money’s worth but now there is no doubt. With four of us in the family and all with very different tastes it has been great. We do the two at a time rentals but I think I will change to 1 at a time because I am the only one who actually watches the mail order movies.
I look forward to this series.
@ReddH – I think if you are the type of movie fan that would see a movie a week, its hard to beat the deal that Netflix provides. I missed a large chunk of the second season of The Office, so I’m looking forward to watching that soon.
@Karla — I definitely came close to canceling for that reason this summer, before I started using their “Watch Instantly” feature. I love Hulu, too, but Netflix has a very impressive selection; I’m constantly flagging things to watch in the future.
@Amber – Sounds like a very similar situation to me; I was very disappointed when they initially limited the number of hours you could use the on demand feature when it first came out; the change to unlimited is largely the reason I’m still a Netflix customer.
Thanks for dropping by, everybody!
I use a service very similar to Netflex from Block Buster. I think it is a little bit less expensive. I have the service where I get tow movies per month. When I first started the service, if I returned the movie to the local store, I could get another movie for free. That meant that I could get four movies per month for the price of two. They still have that service but now charge a premium for it. My list of movies is getting smaller so when they are exhausted I will drop the service for a while. I think I will have seen everything worth while
I love your discussion. I have used Netflix, the similar Blockbuster service, and the Redbox video rentals. With Netflix there are month’s where I hardly use it, BUT there are also months when I used it incessantly – during the winter, on vacation, etc. So the months I rarely use it make up for the months in which my usage is extremely heavy.
I also use the Redbox vending machines, even using the free coupon codes. But these have a “hidden cost”. When you rent a video from the machine you have to return it. Sounds obvious but this is exactly what the supermarkets want you to do.
Return visits to supermarkets mean impulse buys. In fact, studies indicate that over 40% of our grocery store purchases are impulse buys.
Finance experts will tell you that the way to reduce your grocery bills is to reduce the number of trips you make.
So in effect, those cheap Redbox videos act as a “loss leader” for the grocery store to draw you back into the store where you’ll make more impulse purchase.
@Charlie — That is a very interesting point with regards to Redbox, and I don’t doubt that plays significantly into the business model at play. I wonder just how large of a benefit these stores see from having a Redbox machine (who comes out ahead?)
Personally, I usually just drive up to the curb, hop out, return it, and get back in, but I’m sure there have been times where I’ve thought “why not pick this up while I’m here.”.
i subscribed to netflix for about a year and it just seemed to take me so long to watch them that i ended up with maybe 2 movies a month, definitely not financially wise. i found the sites like hulu and the nbc and abc sites and the other ones that actually show MOVIES that are really pretty current and it’s a much better way for me. i cancelled netflix about 2 months ago and honestly i don’t miss it at all. oh ya and yes i fell into that netflix guilt trip too. glad that’s over.
@claudia — sounds like you made the right call. i have definitely come close to reaching that point. truth be told, I could probably keep myself happy simply catching up on The Daily Show, Colbert Report, The Office, 30 Rock,House, etc. on Hulu. I do think Netflix’s Watch Instantly feature might be worth it for many people, possibly myself, although I’m still trying to figure that out. Their new tie-ins are intriguing: the $99 player that streams to your television, the ability to play movies on TiVo, xBox, etc.
I love netflix. Our local Redbox is in McDonalds, which speaks even more to the impulse buy than the grocery store when you have two small children who want McNuggets REAL BAD.
Plus, I am very bad at getting movies back on time. I thought when a new video store opened up down the street that I might cancel Netflix- this place offers free kid movies all the time and new releases are very reasonably priced. I’ve been spoiled by Netflix though, and after paying $9 in late fees because I totally forgot those movies had to go BACK to the store, I think I’ll keep Netflix. Yes, it would be more frugal to not do movies at all, but this works best for us.
Our household has a Netflix account and we love it. We live 25 miles from city center and 4 miles from a highway. It’s far more cost effective for retirees in a very rural area (no cable tv) to obtain movies this way as we watch at least one a day….either via mail or online. Unlike tv, we have a choice what we watch.
Bravo Netflix!
@kelli — Yeah, I can see that using a Redbox at a McDonalds could lead to unfortunate consequences! Another commenter mentioned this effect earlier… I wonder how much of a benefit stores get from having a Redbox. And I agree — the no late fees rock.
@Alix – Sounds like Netflix is perfect for you! Its hard to beat having movies come straight to your mailbox.
They were great until they “UPGRADED” the program where I could watch movies instantly (which is the main reason I subscribed). The first year was perfect with the “OLD” program. I really enjoyed this service and probabley would have stayed a customer for life.
But instead, when I experienced problems with the “NEW” and so – called better virsion of their program; they told me I needed to go out and buy a new computer.
B.S. Even when I was on with the tech we went to other sites with videos that worked fine with my computer, that incidently is loaded with maximum memory capacity and a Athion processor that seems to handle everything but “NETFLEX” play instant movies.
I then asked if I could have the old version; that worked fine on my computer; the tech said I could not; and he didn’t know why they were letting people still operate it?? DAH, BECAUSE IT WORKS!!!
THANKS FOR YOUR SUPPORT NETFLEX!
A once loyal suscriber.
@Scott – That sounds like an absolutely terrible experience, and I sure would be frustrated, too. I’m surprised that they wern’t able to help you more — I was genuinely impressed by their tech support when I called them (maybe my standard was low, but it was refreshing to have a real person pick up quickly and be willing to work with me). I’m not a huge fan of Netflix’s current only player, but it does work on my end.
At least some of the free sites like Hulu are offering more and more content for free these days.
I’ve been a Netflix member since 2003; I have a Blockbuster a half a mile away. Why? Never any late fees. I love the library, too; the branch is even closer than Blockbuster. But those overdue fees.