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Will Saturday mail cuts impact Netflix?

By Ed O'Keefe

Ethan Epstein at Post Co. sibling site BigMoney.com wonders how plans to cut Saturday mail delivery will impact movie rental company Netflix:

Netflix is in many ways the epitome of the 21st century company: It's based in Silicon Valley, it sells its services exclusively online, and it employs a hip bit of Web-speak in its name. But even as it boasts many of the trappings of a New Economy juggernaut, Netflix is still almost entirely reliant on that most 19th century of institutions: the United States Postal Service. Indeed, Netflix is the Postal Service’s biggest corporate customer.
And sadly for Netflix, its big partner is also in the red—the Postal Service lost $3.8 billion last year. In an effort to stop the bleeding, on Wednesday, the USPS took the first step toward eliminating Saturday mail delivery—it asked the Postal Regulatory Commission for an opinion on the matter. (Congress still has to approve the change.) The USPS says it hopes to implement the change in fiscal year 2011. In addition to eliminating Saturday delivery, the Postal Service has also said that it wants to raise postage fees. If these changes are implemented, Netflix's finely tuned business model could suffer a serious blow.
...
In total, Netflix estimates that it will spend $600 million on postage in 2010. A rise in postal rates will obviously skew this formula, and generate pressure on the bottom line. If Netflix can’t mitigate these higher costs through yet more automation, the company will face two options. It could slow down turnaround time, and therefore reduce the number of DVDs that it sends each month: That is, it could sacrifice speed for affordability.

Read Ethan's whole piece here.

RELATED: Interactive history of the U.S. Postal Service

Leave your thoughts in the comments section below

By Ed O'Keefe  | March 30, 2010; 2:00 PM ET
Categories:  Agencies and Departments  
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Comments

The US Govt should not subsidize netflix.

Posted by: wpjunk | March 30, 2010 3:23 PM | Report abuse

I thought we had made it clear that the US government has no interest in the success of the private economy. If Netflix fails, Congress can nationalize it.

Posted by: corrections | March 30, 2010 4:44 PM | Report abuse

My concern with the plan is to have 2 consecutive days with no mail. It was my understanding that Tuesday is the day where the least mail is delivered (because businesses are closed on Sat and Sun) - why not cancel Tuesday delivery so that there isn't a 2 day gap?

Posted by: chrisny2 | March 30, 2010 11:08 PM | Report abuse

More streaming movies online please.

The mailing of DVD's is actually becoming the lesser feature I use Netflix for.

Posted by: anarcho-liberal-tarian | March 31, 2010 9:35 AM | Report abuse

It will definitely affect Netflix. Some customers may not care, but I always tried to get as many DVDs per week as possible with my subscription. Holidays would annoy me because it would mean less DVDs that week. Since Netflix is an online business, I never knew why they took Saturdays off on their end, but at least mail would be delivered on Saturdays.

Posted by: mcmugged1 | March 31, 2010 11:08 AM | Report abuse

Netflix is moving towards online streaming and everyone I KNOW is going to streaming rather than DVD's

I think this forces Netflix to add more shows online and everyone wins

Posted by: Bious | April 1, 2010 7:05 PM | Report abuse

The comments to this entry are closed.

 
 
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