Postal Service Cutbacks Add New Light to Netflix Saga

The announcement by the United States Postal Service that it plans to eliminate next-day delivery for first-class mail could provide another explanation for why Netflix CEO Reed Hastings decided to accelerate Netflix’s shift towards streaming.

As Steven Greenhouse pointed out in an article on the cost-cutting efforts by the postal service, the changes could create problems for Netflix, which has long provided next-day delivery of DVDs swaddled in its signature red envelopes, as long as customers ordered the movies the preceding morning. An increase in delivery delays to two or three days would be a significant blow to the convenience of Netflix’s DVD rental service, which could explain why Netflix wanted to carve out a separate brand for that business. It isn’t clear yet, though, whether delivery of Netflix movies is going to get a lot slower. Steve Swasey, a Netflix spokesman, said the company had a longstanding relationship with the Postal Service and would “work with them to ensure a minimal effect on Netflix DVD members.” Mr. Swasey wouldn’t say how Netflix planned to do that. The company has long bypassed portions of the mailing process, by presorting its DVD mailers by ZIP code and shipping them directly to postal processing centers. Patrick Donahoe, the postmaster general, told The New York Times on Monday that there would still be opportunities for companies to receive next-day delivery and that Netflix officials had told him they planned to do this to ensure many next-day deliveries.