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Netflix Considers Weekend Delivery While Post Office Contemplates Saturday Elimination

3 Feb, 2009 By: Erik Gruenwedel

Netflix has begun shipping DVD rentals from distribution centers on Saturdays in select regions despite warnings from the U.S. Postal Service that it may suspend weekend mail delivery in order to cut costs.

CEO Reed Hastings, in last week’s financial call, said the Los Gatos, Calif.-based online DVD rental pioneer would begin testing weekend shipments from its 58 distribution centers in an effort to reduce delivery times in some areas to less than one business day.

A Consumer Reports magazine online survey released this week said Netflix’s shipment time was one reason it rated the DVD rental service No. 1.

“[This] will provide even faster service both for those new subscribers who sign up over the weekend and for those subscribers returning movies at the end of the week,” Hastings said.

Postmaster General John Potter last week told a Senate subcommittee the nation’s mail carrier was considering eliminating a day (including possibly Tuesday) from its six-day delivery schedule after posting a $2.8 billion deficit in 2008. Potter said steady declines in mail shipments coupled with rising costs could balloon the deficit to $6 billion in the current fiscal year without the delivery reduction.

If the United States Postal Service decides to go forward with five-day mail delivery, Netflix is ready, said Chief Content Officer Ted Sarandos. Speaking at the Future of Packaged Media conference in Los Angeles, Sarandos said the company has more than 100 distribution centers, and would be prepared should mail service be reduced by one day.

"If you look back in history, [the postal service talks] about these things a lot, but then they get their budget allocation and everything works out," Sarandos said. "It's one of those things you have to follow, that you can't control."

— Senior Reporter Chris Tribbey contributed to this report.


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