No Netflix Saturdays
By George Anderson
Many consumers have marveled at the speed at which Netflix turns around returned
movies and gets new ones into their mailboxes. Many members of the video rental
service get new movies in a day. The ability to consistently accomplish this
feat is a testament to the company and its delivery partner, the U.S. Postal
Service (USPS). So, what will happen to Netflix once Congress approves the
end of Saturday postal deliveries?
Netflix, according to a report on The Big Money website, is the biggest
customer of USPS. The company expects to spend $600 million on postage this
year. But, with cutbacks in delivery service and potential hikes in the future,
is it possible that consumers may seek other DVD rental options?
According to The Big Money article, "The elimination of Saturday
delivery would mean that Netflix subscribers will have to endure two consecutive
days of no service — nothing to scoff at in a time when consumers have
come to expect high speeds and (nearly) instant gratification. And Saturday
is a big movie day; the blogger who runs the online bible for Netflix fanatics, Hacking
Netflix, said via telephone that many subscribers have come to expect
to receive movies on Saturdays and may be very disappointed."
Discussion
Questions: What effect do you think the elimination of Saturday postal deliveries
will have on Netflix and the DVD rental market? How likely, for example,
are Netflix subscribers to try other video rental options with the elimination
of Saturday postal deliveries?
The “I want it and I want it now” attitude pervades much of our culture. It has given rise to the fast food industry, contributed to the success of Netflix, etc.
Now that Netflix’s customers have become accustomed to selecting a movie on Friday and getting it on Saturday there is no question in my mind that they will be disappointed when they cannot. Given the demise of many of the movie rental brick and mortar locations, I would expect that many of Netflix’s customers will look to the DVD kiosk locations for their movies. This will cause this method of movie rental to grow even faster.
Perhaps look for the Post Office competitors to step up and come up with an alternative.
How whiny can we get? Three simple Netflix options: make sure your movie for Saturday comes on Friday, upgrade to 2 DVDs at a time, or watch instant movies. And get over it.
Netflix customers, if they are like me, have more than one disk at home, often several. With the advent of the new Blu-ray players that are Wi-Fi equipped, you can download many titles by entering them from your iPhone or other PDA. The future is digital delivery which has nothing to do with Saturdays or the USPS.
The bigger question is, will the USPS still be necessary or relevant in the expanding digital age?
Of course, customers have the option of buying from Redbox or even Blockbuster if their Netflix CD doesn’t show up on Saturday as expected. At the same time, this is another good reason why Netflix itself has been looking beyond its traditional delivery methods to online video streaming — not only through computers but also through the Xbox, Blu-ray players, and so on. The Netflix delivery model is likely to look much different in five years…or sooner if the USPS cuts out Saturday delivery, in any case.
Redbox has just released an iPhone app that allows you to check local kiosks – which are apparently internet-connected – for the availability of the movie you desire and then reserve your selection. (See NY Times blog.) It’s a terrific distribution system and a good second-best to having it arrive in your mailbox on Saturday.
Netflix has succeeded by creating service options for customers. Loyalty is high, and expect that the “Netflix community” will help ease the pain of the USPS cutback with suggestions and more options. Good ideas like Netflix don’t disappear when the government changes a thing or two; they find another way!
I think Netflix has done a wonderful job getting themselves associated with the various Blu-ray device manufacturers and positioning their distribution mechanism to take advantage of the expanding broadband network. The bigger question is – what will the USPS do when the expanding broadband network makes their services obsolete? The effort to expand broadband coverage is merely accelerating the demise of the USPS.
The quandary here is the same challenge application developers face with all their efforts to help retailers. Computers and networks can move data at nearly the speed of light but human beings and merchandise are still constrained by personality and the limits of the physical world. People are slow to change and although some people now commute to work online, visit with family and friends over Skype video, and shop online, others still prefer going to the office, exchange phone calls, and go to the mall. From a merchandise perspective, no matter how quickly sales are reported, it still takes time to replenish store inventories.
The challenge with all this (and since one of our other topics today is social responsibility) is at what cost do you continue the old ways? At what point does Netflix say, “We can no longer support DVD deliveries and will only deliver over broadband”? Now what happens to all the USPS employees who are no longer making Netflix deliveries?
These are tough questions. Change is difficult (dare I mention healthcare). And as things continue to evolve more quickly, it is going to be more important than ever that we figure out the answers.
The option is not the video store or even the kiosk. The option is the direct steaming to the TV. Half of all the Netflix movies we watch are direct streaming; they play instantly. It is not even an extra charge to the unlimited one DVD at a time Netflix option.
This will be a short term problem. Soon there will be no DVD rental. Everything will be direct streaming or downloading.
The greater issue is how the USPS will replace the $600,000,000 customer that will go away, with or without Saturday delivery.
I just went back and read some of the other responses and I think many miss one of the key points about Netflix. The “Long Tail” was a big discussion point several years ago. The point is that Netflix makes as much money off the bottom 20% of its movies as it does the current releases. By being able to serve a vast market with unique tastes, Netflix can truly be “something for everyone.” I am not sure the kiosk competitors can offer the variety that Netflix provides and, while they may take away some of the hot sellers, Netflix will always have the upper hand on niche markets.
Now, if you already have a Netflix subscription because of the video on needle point you wanted, why drive to the Kiosk?
Then again, I guess it means Netflix’s biggest competitor becomes YouTube. Don’t you love change ……
They could start a new promo: ‘Stock up for the weekend Fridays’ where they have a 3 or 4 movie combo on Wednesday for Friday delivery. More focus on digital delivery will also eliminate the need for Saturday delivery. You Americans with your Saturday mail. Living like kings, I say!
At first consumers may be disappointed that a Neflix DVD cannot arrive on Saturday, but then no deliveries on Saturday will become routine and consumers will adjust. In fact, no Saturday delivery may hasten online downloading of films, which Netflix also offers.
Gene asks the right question. If the USPS is eliminating Saturday deliveries in order to reduce costs, is potentially losing its biggest customer a good idea?
Netflix will come up with alternatives and I expect UPS and FedEx are being more than helpful in offering alternatives.
If there is no Saturday delivery, Netflix will save roughly $100 million in postage. Assuming that one fewer day of delivery doesn’t negatively affect their number of subscribers (which it probably won’t) As other people have noted, Netflix has the advantages of loyalty, broad selection, multiple disc delivery and instant streaming going for it. They’ve suddenly got $100 million to invest (if they’re smart, which so far they have been) in other values for their customers (more instant streaming selection, savings, referral rebates, etc.). I think Netflix is going to make out on this government move.
If Netflix has learned anything it is to not be another Blockbuster. Lots of great suggestions in the responses.
With the Netflix philosophy that change is inevitable and growth is optional, I think they will turn no Saturday delivery into a great marketing bonanza.
Just as consumers shop in multiple channels, I would think most movie rentals are multichannel. I know we’re a Netflix, Redbox, On-Demand family. Like most consumers, we want what we want when we want it. I don’t see it having a whole lot of impact.
I love Netflix. They are in the entertainment business that has a business model that is built around a reliable delivery system in the USPS. As the USPS evolves in the coming years, it is in the best interest of Netflix to support and promote alternative forms of delivering their content. Their downloadable content is an alternative.
In a competitive world, they beat their competition several ways. The delivery system of their product is only one of them. Their library of material and the ability to search for content is an equal part of their value equation.
Not so much. If you’re using Netflix, you likely have more than one on hand anyway. If you’re like me, you have little time for movies in the first place. They ran their course with me a long time ago and I haven’t seen one movie in years that I have been drawn to see enough to rent or go to the theater. I am considering Blind Side, not seriously enough yet to bother.
While I realize many do the movie thing as part of entertainment, I just simply have lost interest. As a consumer, you’ll find ways to get what you want. As a provider of this service, Netflix and others will innovate to meet the consumer’s need or just lose out. If the demand is so great, someone will fill it.
Baseball begins next week. There are a 162 opportunities for me to be entertained until late October. Maybe I’ll give a ‘flick’ another thought then. Until then, the boys of summer will be heard on the radio and from the TV in our house.
My elderly Mom is probably in the upper one percentile bracket of Netflix users, being a “platinum” Netflix subscriber for seven years now.
She has an almost foolproof game plan that has worked very well for her on holidays, and now it will come into play when Saturday service disappears.
She subscribes to the 7 Netflix movie plan and, of course, unlimited on demand. So on Thursdays, she will return two, that her mailperson picks up at her home, and another two on Friday. When they are received in the warehouse, she will have at least two ready to be sent to her mailbox which she will receive on Tuesday and probably two on Monday, that she would normally receive now on Saturday.
Life is full of adjustments, and Netflix is a godsend for her and thousands of other elderly who are partial shut-ins.
She has seen thousands of movies in this period, and she loves telling me about them during our nightly phone chats.
Netflix will need to change their model and shipping DVDs will be disappearing. If 5-10MM iPads are sold in the next 12 months, and AT&T and Verizon continue their march into “cable TV” homes, we will see a drop in the cost of downloading media, an increase in download demand, and a dramatic decrease in demand for DVDs of all flavors. Blockbuster is already out of business and Netflix will be next if they do not change their model. For Netflix this is about adaptation or perish.
I’m surprised anyone could think the answer is anything other than “very likely,” but it has nothing to do with postal rates or service days; it has to do with the fact that physical delivery is remarkably inefficient for movies. The “mail it in” idea will slowly die along with the remaining members of Lillian Gish’s fan club. (My real concern with Netflix is more prosaic: how do their ads keep thwarting my pop-up blocker??)
Sure they will and Netflix is pushing their streaming service. This is the long term solution anyway and will likely allow Netflix to stream about $600 million into marketing or to their bottom line. Look for download kiosks, like Redbox, but you would order a movie online and pick it up via a thumb drive. The post office will lose this business in time anyway. Hey, we used to make phone calls on devices that were wired to the wall and had a cord on them (so you couldn’t lose them). And you think the post office has a problem!