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.
Is your company private? If you're not heavily funded by investors you probably have more freedom to behave according to your morals than if it were otherwise. Public companies are always looking to meet shareholder expectations on the other hand.
Not saying they can't occasionally make altruistic decisions like this, just that more people's interests are being weighed.
That's not a requirement or anything. There's no law that says you have to maximize short-term revenue at the expense of customer happiness.
I think it's become common because the average public company CEO tenure has fallen by 50% over the same period that their compensation has gone up 10x. Now it's in their strong interest to juice the quarterly numbers and not worry about anything particularly long term, because that's going to be the problem of some other sucker. And similar incentives apply all down the executive hierarchy. The faster people move around, the easier it is to make bonus-related metrics go up even if it harms things a few years down the line.
Always might seem a bit strong, it is always according to shareholder capitalism. But many companies find that shared value creation [0] works better for them in the long term
I'm amazed how many SaaS users are zOmBiE uSeRs, this is from working on client SaaS apps. One had about 20% of the users paying and not even logging in for months or even a year.
Props to Netflix for unsubscribing users who don't use the service.
I think the wider point is that it's amazing how lax and careless so many people are with their personal finances. They think nothing of wasting hundreds (thousands?) of $$$ a year on unnecessary purchases, including things that they don't even use (like old software subscriptions.) Then they complain that they're broke.
When I hear sob stories about how #{big_number}% of people can't afford an unexpected $500 bill, I'd love to know how many of those people would easily have $500 in savings if they cancelled all their unused subscriptions and stopped buying a new smartphone every year.
Were those B2B SaaS? Subscriptions are a huge controlling challenge for businesses with more than a few employees. If they are easily available people will think that it's fine to keep them running, I they have to jump through hoops to get them they will try to avoid repeating the process.
Sure, businesses like to control spending, but this scenario seems backwards. If the hoops have been jumped through to get the subscription approved once, and one might need to use it again in future, why would one ever cancel it? Whereas, if subscription approvals were easy, one would be more likely to worry about spending the firm's money unnecessarily.
This is sort of like the fact that strict border controls encourage undocumented immigrants to stay once they've passed the border once.
> Many people give money to ensure that a service is available when they need it.
Netflix, as a service, takes ~10 minutes to set up. This might be the case for a software suite like CC, where you might need to download a massive amount of data, or other software where you pay annually or enter into some kind of contract, but Netflix is strictly monthly and easy to sign up for by design.
That is mostly, but not entirely true. If one's Netflix account is deactivated for more than 10 months, they lose their history, preferences and personalized results.
When I did have Netflix, the history/preference/personalized results were a detriment to my experience, as Netflix would intentionally make it harder to find what you wanted to watch and jumble things around constantly to make their content library seem bigger than it was.
Netflix also has use-cases where it's much more difficult to sign up. For example, someone who watches Netflix on a game console (Xbox, Switch, etc) might only occasionally watch it, and also have a much longer sign-up process (not only the flow, but also dealing with console keyboard, not having a password manager, etc). Ditto for people who use other hardware like Chromecasts and such and may not have a dedicated "computer" where it's quick to just sign up from when they find they've been downgraded.
I also run a business designed to be used in the moment when an author is struck with inspiration. It takes less than a minute to upgrade or downgrade (and some users choose to only upgrade for hours at a time each month with no penalty, aka a month of subscription time sometimes lasts a full year), but when I experimented with automatic downgrades to those who hadn't signed in all month I got complaints that they "weren't able to just log in and use the service they paid for".
Could just be a notice thing (improving messaging to more reliably let users know they've been downgraded), an option (letting users opt-in/out of automatic downgrading), or have other solutions (maybe refunding instead of downgrading?), but it does seem that at least some users like to feel like they're paying for something to be "at their fingertips" when they need it.
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.
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.").
If I sign up for a gym membership and then don’t show up for months on end, I don’t feel like I’ve been swindled — I knew that’s how it works when I signed up. I’m not confused about what a gym membership is for or why I’m paying for it. I might still never cancel because I don’t want to admit how lazy I am, so each instance of me considering the wasted money ends with me thinking, “I really should get to the gym more. Maybe next week.”
This same dynamic plays out with any service that sells you long-term self-improvement but is burdensome to use. Exercise tracking apps, diet tracking apps, health-conscious meal kits, subscription lessons for music or foreign languages, etc. There are shadier examples for sure, but it’s not always cut-and-dry evil.
On the flip side I think it’s probably cheaper to cut ties with an inactive user than deal with small claims lawsuits, chargebacks and other hassles from people who forget they are subscribed.
Honestly I could see this being an honesty test class action at some point.
On the other hand, you can also do it nicely even in self-improvement space. Beeminder comes to mind; they let you set your productivity goals and costs of not meeting them, and they only ever charge you if you fail, and accept that you've failed - charge is automatic, but if you tell them there were extenuating circumstances, they'll give you that money back.
The standard, from In Re Walt Disney, is that business decisions aren’t reviewable unless “the exchange was so one-sided that no business person of ordinary, sound judgment could conclude that the corporation has received adequate consideration".
In, Shlensky v. Wrigley, the Chicago Cubs’ were sued for refusing to install lighting for nighttime games: their president believed baseball was best as “a daytime sport." This is absurdly nebulous (and kind of bizarre), but the Cubs nevertheless won.
That decision was based on Davis v. Louisville Gas and Electric Co, which says “the directors are chosen to pass upon such questions and their judgment unless shown to be tainted with fraud is accepted as final. The judgment the directors of the corporation enjoys the benefit of a presumption that it was formed in good faith, and was designed to promote the best interests of the corporation they serve.”
It is probably true that this policy earns Netflix some intangible goodwill. It might plausibly make them more money. However, even if it didn't, it would still be within its rights to implement such a policy.
Long term, both being, and being seen as the kind of company that doesn't needlessly abuse their customers, is in the best financial interests of a company.
US courts have ruled that company management have "wide latitude" in how they manage the company.
(The reason is that the courts don't want to get involved in the minutae of running private companies. They'd rather you just update your company bylaws.)
However, shareholders, or most famously private equity (PE) companies, may pressure mgmt. to adopt certain policies and goals, and use their voting shares to encourage or even enforce that.
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.