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Netflix: No Comment on Possible End of Saturday Mail Delivery

2 Mar, 2010 By: Erik Gruenwedel

Netflix: No Comment on Possible End of Saturday Mail Delivery

By Erik Gruenwedel

A Netflix spokesperson March 2 declined comment regarding suggestions the United States Postal Service would eliminate Saturday delivery in an effort to cut costs.

Faced with a possible $238 billion shortfall over the next 10 years as consumers opt away from physical mail delivery, the Postal Service said it would close branches, eliminate 30,000 positions and possibly reduce deliveries to five days per week.

Mail volume is projected to fall from 177 billion units in 2009 to 150 billion units in 2020. That represents a 37% decline in first-class mail resulting in 16% revenue decline.

Netflix last year said it would spend $40 million over the next 18 months investing in new automated rental return machines in an effort to cut costs and stay abreast of burgeoning disc shipments.

The online DVD rental pioneer spent $600 million on first-class postage in 2009, an expense that is expected to increase to $700 million this year.

Spokesperson Steve Swasey said the company would adjust its operations accordingly if Saturday delivery is eliminated — a situation he said required regulatory approval.

“It’s inappropriate to speculate since it is a long way off, if it is indeed a reality,” Swasey said.

Edward Woo, analyst with Wedbush Morgan Securities in Los Angeles, said elimination of Saturday delivery would significantly reduce shipping costs with little effect on subscribers.

“The impact is slight as convenience of mail is still high even if they lose a day,” Woo said.

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