It's unlimited because you can check out as many different movies as you want (building in transit time obviously). Netflix doesn't know or care you have a wife who wants a different movie, if you want two movies at once get a plan that supports that.
Similarly, unlimited streaming makes perfect sense because you can stream as many as you want. The selection of their available physical DVDs is limited as well, you always have to stay within their catalog.
I think the throttling thing was a long time ago. I've been a Netflix subscriber for 4 years and have never been throttled. And yes, there have been many occasions where I've sent discs back on the same day I received them (putting them in a blue mail box that hasn't been picked up yet). The only delays I've ever had were due to postal holidays or once when a couple of discs over a span of a few days were mangled in some processing equipment (the USPS dutifully delivered the torn-off front flap to me, sans DVD).
Netflix has never stopped "throttling", perhaps it has gotten better over the years as they opened more distribution centers & expanded their library, but it's never gone away. They are rather vague about how it works & don't want to explain it to customers which is why they tuck it deep in their DVD Terms and Conditions.
DVD Terms and Conditions
As a result of your viewing habits and our operational practices, the actual number of DVDs you rent in any month may vary, and you may experience differentiated service during the course of your membership. Also, such service may be different from the service we provide to other members on the same membership plan. The type of differentiated service you may experience includes, (i) the shipment of your next available DVD occurring at least one business day following return of your previously viewed DVD, (ii) delivery taking longer, as the shipments may not be sent from your local distribution center and (iii) the DVDs you receive coming from lower in your Queue more often than our other members.
Netflix has algorithms that decide how quickly your next dvd is sent. More accurately, it uses a score to rank the group of people who have the same DVD at the top of their queue in order of who should be allocated the next available copies.
This score is based on a number of factors, with the objective being to maximize subscriber happiness (one example question is whether is it more valuable to have quick turnaround for a frequent subscriber who is already happy with the service, versus an infrequent user who might be on the fence--it is not obvious who would be more sensitive to and negatively impacted by a delay in receiving the next DVD).
(Source: I work with people who previously worked at Netflix. This is not confirmed fact but a loose understanding based on casual conversations.)
Living in Hartford (home of a distribution center), I find that I am still experiencing some throttling on my unlimited disk plan. I recently went on watching Big Bang Theory and saw a surprising decrease in turn-around-time as I started to return disks at a regular pace again.
I don't know if it is actually due to throttling or not, but Netflix is preceived at least to still be throttling me.
Same here. Our turn-around is usually two days. We routinely get the "we've received" emails but our next ones won't ship for 1-3 days after that. It's annoying considering the "unlimited" plan claim.
Really? Sources tell me that they copy each DVD and drop it back in the mail the same day, yet these sources report no apparent delay in receiving the next DVD. This is on a 1 DVD subscription, btw.
This sounds less like "throttling" (i.e. you've gone through too many discs this month) and more like balancing (i.e. how do we distribute 100 copies of this movie to the 1,000 subscribers who have it at the top of their queue).
The lawsuit is the reason that disclosure is in the Terms of Service now. It was not previously in there, that is why they were sued. The settlement required them to disclose this practice so that customer's could make a potentially more informed decision about what Netflix offers as a service.
You are correct that it really only affects situations where demand outstrips available supply.
While I believe internally Netflix called it smoothing or something like that, throttling isn't an inaccurate term either.
Much of the anger came from the fact that an existing customer could put something in their queue & see "Long Wait" which may mean that movie would probably be delayed weeks or even months. Meanwhile their friend might setup a new account that weekend & get that same movie immediately. This lead to people feeling as though Netflix was shafting existing customers while at the same time giving new customers an unrealistic experience.
Many sign up thinking they are going to be saving a lot of money by going with Netflix, but if their main interest is new releases then they are going to have difficulties getting every new release in a timely manner. This is something that Netflix doesn't really disclose very well & they are a little misleading with their marketing as you'll often see them promoting mainly new releases in a lot of their marketing material.
One more thing is that Netflix has gone as far as hiding certain new releases on it's New Releases section on purpose so as to prevent people from being able "hog" all the new releases. This seems rather anti-customer & goes against their original motto "Connecting People With Movies They'll Love", which really boils down to "We want you to use our recommendation engine which steers you towards movies that cost us the least...".
Similarly, unlimited streaming makes perfect sense because you can stream as many as you want. The selection of their available physical DVDs is limited as well, you always have to stay within their catalog.