The Psychology of Netflix

The spending response is strongly affected by two variables: effort and time. The Netflix system of DVD rental by mail has succeeded by reducing both. Before Netflix, renting a movie required a trip to the video rental store, which took both time and effort. Ordering online meant that by planning ahead you could always have a movie on hand, so you could watch a movie without going out to get it. Furthermore, Netflix’s enormous selection and sophisticated searching and recommendation system make it much more likely you will find movies you really want to see.

The one drawback of the Netflix system is that you cannot be completely impulsive. The movies you order come in the mail, so at very least, your viewing selection must take place a day or two before you watch. You have to plan ahead. Finally, even if you have one of the Netflix plans that allows you to have several movies on hand at a time, a serious weekend movie binge can burn through your stack of DVDs, forcing you to wait until the postal service has time to replenished your supply.

So Netflix is an incompletely impulsive indulgence. You cannot make a movie choice on a whim, click, and immediately start watching, but several companies have been working on this “problem,” wrestling with various technical hurdles in an effort to provide their customers with unfettered indulgence. Yesterday, the NY Times reported that Netflix will now offer a $100 box that will connect to your television and allow downloading of good quality movies over the internet. You use your computer to do the ordering, but you watch the movie on your TV. For those who use it, almost complete impulsivity will be possible. If a friend tells you that you should see a particular film you have never seen before, you can begin watching it in a matter of seconds. Furthermore, once you have purchased the box, you will be able to view as many movies as you want without extra charge. The service will be a free feature of your Netflix subscription and there is no limit to the number of movies you can watch. So, although the thought of the ultimate couch potato, endless weekend movie binge is a bit worrisome, it will now be possible. No need to get out of your pajamas.

For Netflix, the advantage of this system is protection against losing customers to Apple or Tivo, but the effect of this innovation (do we call this progress?) on the consumer will be more movie-watching. The pause in the action created by the postal system will be stripped away, and impulsive and completely uninhibited movie indulgence will be possible. Is this a good thing? Yes and no.