Netflix might start weekend distribution
Company plans unchanged by postal-service request to stop Saturday deliveries
By Danny King -- Video Business, 2/3/2009
FEB. 3 | Netflix might start keeping some of its distribution centers open on weekends in an effort to better fulfill subscriber requests for early-week delivery despite a request by the U.S. Postal Service for Congress to allow it to stop Saturday deliveries in order to stem losses.
The largest U.S. movie-rental service via mail, which has 58 U.S. distribution centers, might soon start processing orders on Saturdays and Sundays, Netflix CEO Reed Hastings said in a conference call with analysts last week.
Netflix spokesman Steve Swasey confirmed yesterday that the company might open plants in some parts of the country over the weekends, though declined to be more specific.
Two days after Netflix reported earnings, U.S. Postmaster General John E. Potter told Congress that the Postal Service lost $2.8 billion last year because of rising costs and falling demand and might lose as much $6 billion this fiscal year with its current six-day weekly delivery schedule, the Associated Press reported last week. The Postal Service estimated that cutting one delivery day per week would save as much as $3.5 billion a year, AP said.
Swasey said Netflix's plans would be unaffected by the Postal Service's request to cut one delivery day per week.
Although Netflix has been trying to boost subscribers by augmenting its by-mail service with an expanded inventory of titles through its video-streaming service, the company has said it's at least five years away from reaching a subscriber-by-mail peak before customers' exclusive adoption of digitally delivered content begins to cut into the number of people who have DVDs delivered to them.
Netflix last week reported that its fourth-quarter profit surged 45% as its customer base grew faster than the company forecast last year, while it cut costs related to acquiring new subscribers. The company also said it boosted customers by 26% from a year earlier to 9.39 million year-end subscribers, more than its October forecast of as much as 9.15 million. Netflix doesn't disclose how many people are using its video-streaming service.
