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Postal Service Surcharge Could Slash Netflix Profit

kdawson posted more than 6 years ago | from the troublesome-red-envelopes dept.

Movies 268

mikesd81 writes "Boston.com reports that Netflix Inc., the largest US mail-order movie-rental service, may suffer a cut in profits if the US Postal Service starts charging extra to manually sort the envelopes that carry its DVDs. An audit prepared by the Postal Service's Inspector General last month recommended charging one unidentified company 17 cents per envelope for labor costs. Citigroup analyst Tony Wible, who said in a note to investors Tuesday that the company is Netflix, estimated the charge might reduce profit per subscriber to $0.35 from $1.05. Wible advises investors to buy Blockbusters shares because their DVD envelopes don't have the problem (floppy edges that jam the USPS's automated sorting machinery). Netflix says the whole thing is no big deal and they will change their envelopes if necessary."

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Netflix says they will just change the envelopes (4, Informative)

Anonymous Coward | more than 6 years ago | (#21598873)

Netflix says the whole thing is no big deal and they will change their envelopes if necessary. I don't see the problem. Netflix doesn't seem worried.

Re:Netflix says they will just change the envelope (5, Insightful)

timster (32400) | more than 6 years ago | (#21598943)

Note that this "analysis" is from a guy who's been recommending Blockbuster stock over Netflix stock for a while, and that's been looking like a really dumb recommendation lately. The scenario described in the article -- where Netflix takes no action to rectify a problem that would destroy all their profits -- is unreasonable on its face.

Re:Netflix says they will just change the envelope (0)

ByOhTek (1181381) | more than 6 years ago | (#21599117)

so, basically it's a slow, lame, pump&dump?

Re:Netflix says they will just change the envelope (2, Interesting)

Russ Nelson (33911) | more than 6 years ago | (#21599405)

But it creates a nice buying opportunity for Netflix stockholders ... or selling opportunity for people who had already shorted Netflix.

Re:Netflix says they will just change the envelope (1, Informative)

Anonymous Coward | more than 6 years ago | (#21599939)

Why would someone that shorted the stock want to buy more at a lower price ? Perhaps you do not understand the concept of "shorting" a stock.

You sell short when you feel the stock will drop to a LOWER price then the current price. In essence you sell stock you don't have , then buy the stock to deliver at the price you sold it as.

Netflix also says they pay more than they need (5, Interesting)

A nonymous Coward (7548) | more than 6 years ago | (#21599703)

Netflix also said they pay for pickup service even tho they deliver their shipments to the post office, at an estimated $100M savings to the post office. They could either demand the post office pick up as they are paid to do, or charge less for what they don't do.

Either way, this is nothing but a conflict of interest from that so-called analyst. I wonder if the SEC will investigate him for this.

Re:Netflix says they will just change the envelope (4, Informative)

infonography (566403) | more than 6 years ago | (#21599021)

Netflix says the whole thing is no big deal and they will change their envelopes if necessary. I don't see the problem. Netflix doesn't seem worried.
Agreed, They have been evolving their design [cnn.com] for some time now this isn't a problem for them.

Snarky comment alert! (5, Funny)

UbuntuDupe (970646) | more than 6 years ago | (#21599421)

Agreed, They have been evolving their design for some time now

Um, don't you mean they were intelligently designing it?

***

Hey, if it costs the USPS more, maybe they could pay for it from the ill-gotten profits they derive from selling spamming services!

Re:Netflix says they will just change the envelope (3, Funny)

kpainter (901021) | more than 6 years ago | (#21599261)

Netflix says the whole thing is no big deal and they will change their envelopes if necessary

Ah ha! And that is when Blockbuster is going to reveal that they have a patent on the "Postal Sorting Machine Non-DVD-Jamming Envelope". I predict a $500 Billion patent infringement lawsuit to follow.

Re:Netflix says they will just change the envelope (1)

Orange Crush (934731) | more than 6 years ago | (#21599767)

Fortunately for Netflix, they have no intention of infringing on Blockbuster's patents on an envelope that doesn't jam DVDs. Unless of course Blockbuster also has a patent for "A Non-Postal Sorting Machine-Jamming DVD Envelope."

you suck (-1, Offtopic)

Anonymous Coward | more than 6 years ago | (#21599801)

Disagree?

call [usa] 1-734-281-8593

or fax 1-734-281-1011

Bababooey

well, there is a simple solution for that (3, Insightful)

jacquesm (154384) | more than 6 years ago | (#21598875)

simply distribute them digitally :)

I'm sure that people won't mind downloading them and it will save some $.

feel free to report any abuse on http://ntlgl.com/ [ntlgl.com] ;)

Re:well, there is a simple solution for that (5, Funny)

gEvil (beta) (945888) | more than 6 years ago | (#21598923)

They already do have a digital distribution system--the mailman picks up the envelope with his fingers and drops it into my mailbox.

Re:well, there is a simple solution for that (3, Interesting)

Abreu (173023) | more than 6 years ago | (#21598935)

But then either one of these two things would happen:

1- The downloaded files would have enough DRM on them to make them unusable

2- The MPAA would shut down Netflix in about two seconds

Re:well, there is a simple solution for that (4, Informative)

Thansal (999464) | more than 6 years ago | (#21599293)

Interesting, The digital distribution that Netflix DOES have is not overly encumbered with DRM (My mum can use it with 0 problems), ran fine when I used it, and has a relatively decent selection.

Re:well, there is a simple solution for that (3, Funny)

timster (32400) | more than 6 years ago | (#21599417)

And yet I can't get it to work no matter what I do. Though I think it would help if Microsoft released a version of Windows for the PowerPC.

Re:well, there is a simple solution for that (2, Funny)

petermgreen (876956) | more than 6 years ago | (#21599907)

Though I think it would help if Microsoft released a version of Windows for the PowerPC.
They already did with NT 3.51 and NT4 though they dropped it again pretty quickly and there are all the issues being a different architecture has on other operating systems to contend with too (i'm not sure if it had an emulation layer for running i386 binaries or not).

IIRC they also produced a version of NT4 for powerpc with updated directx for XBOX 360 developers which they supplied to said developers on powermacs.

Re:well, there is a simple solution for that (1)

ktappe (747125) | more than 6 years ago | (#21599819)

The digital distribution that Netflix DOES have is not overly encumbered with DRM
Oh, really? So it will work fine on my mum's new MacBook and my Linux box then?

Re:well, there is a simple solution for that (1, Interesting)

Anonymous Coward | more than 6 years ago | (#21599497)

netflix supplies specially marked/labeled blank rewritable discs (limited number according to your subscription plan).
netflix provides it's own disc burning software that will only burn netflix supplied discs.
users download proprietary format disc images & burn them.

as the disc approaches its limit on rewrites, the burner would notify the user & user can request new disc(s). he will send back the worn out disc.

allow a small number of re-downloads to deal with interrupted downloads, corrupted images & hardware failures.

Re:well, there is a simple solution for that (1)

darkmeridian (119044) | more than 6 years ago | (#21598977)

Or even less revolutionary, Netflix will redesign the mailers to look like BlockBusters, unless BB patented their envelopes. I haven't found any such patents in my preliminary search, but who knows what is going on nowadays with patents?

Re:well, there is a simple solution for that (2, Insightful)

Anonymous Coward | more than 6 years ago | (#21598987)

Well, I do not want digital downloads. I have DSL and do not have cable in my area. Plus my hard drives don't have enough space. Plus my HD-DVD is in the other room connected to a big TV.
So DVDs work just fine for me. Netflix, change the envelopes!

Re:well, there is a simple solution for that (2, Informative)

gEvil (beta) (945888) | more than 6 years ago | (#21599011)

Actually, for a serious answer, Netflix does offer streaming video on their site. Of course, it has the usual caveats--you must view the site in IE on Windows since it uses WMV. If you have a MCE machine hooked up to a TV, though, it's actually not too bad. You get 1 hour of viewing time for each dollar you spend on your monthly plan. That is, if you spend $13.99 for a two-at-a-time plan, like I do, you get 14 hours of viewing time a month. The selection isn't all that great so far (they're definitely testing the waters with it), but they do have some recent movies, some decent TV shows, and a whole ton of BBC stuff. I ended up finally watching Heroes season 1 using it last month (although I ran out of time and had to rent the last disc to get the season ending). I plan to watch Season 2 when my time resets next week.

Re:well, there is a simple solution for that (3, Interesting)

TooMuchToDo (882796) | more than 6 years ago | (#21599151)

I'm currently building a set top box to handle Netflix Watch Now so you can view it on your TV. I offered to work with them to integrate with them at no charge (my selling point is a bunch of other features). They said they weren't interested. I'm still moving forward with the project though. Let me know if you're interested as a beta tester.

Re:well, there is a simple solution for that (1)

joshv (13017) | more than 6 years ago | (#21599531)

Thanks, but I'll just keep connecting my laptop to my TV via the VGA port - you can keep your "bunch 'o features".

Re:well, there is a simple solution for that (1)

timbck2 (233967) | more than 6 years ago | (#21599793)

you must view the site in IE on Windows
That's a pretty huge limitation, especially for the Slashdot crowd! It certainly rules it out for me. Wake me it works on Mac OS.

Re:well, there is a simple solution for that (1)

Major Blud (789630) | more than 6 years ago | (#21599043)

Netflix already has this with their "Watch it Now" feature. Although the selection is currently limited, it is growing, and it works quite well.

Re:well, there is a simple solution for that (5, Insightful)

prestonmichaelh (773400) | more than 6 years ago | (#21599185)

I'm sure that people won't mind downloading them and it will save some $.

I disagree with this. I would mind downloading them and I am computer guy/nerd/whatever. I don't want to sit in an uncomfortable office chair in front of a PC to watch a movie for 2-3 hours. I have already setup my TV, DVD Player, Surround Sound, etc. so I can sit on my comfy couch to watch movies. I also don't want to have to either purchase fancy speakers, etc for my PC (I don't play games, so I have no real need for them) and I don't want to have the hassle of trying to hook a PC up to my TV. Although I know all it would take would be a few cables and it isn't that hard to change the video source, I would have to have the following:

1. A PC to hook up to the TV (assuming I don't want to move mine from my desk in my home office)
2. Either a video card with an S-Video out or a TV with a VGA input
3. A way to make sure the PC was quite, but wouldn't overheat and could fit in my TV cabinet and still look nice (so my Interior Designer wife wouldn't freak out about the computer sitting on the floor next to the TV)
4. A wireless card for the PC, since I use a wired connection right now because my DSL modem/router is right by my PC and there is no cable run to where the TV is.
5. Some sort of remote for the PC, since there is no real good surface that is convenient and/or close by to use a mouse (assuming I had a wireless one) on.

Sure, I could watch it on my computer, but I just don't like it and feel that (other than here on slashdot) I am not in the minority. I also, like most people (again other than those on slashdot) don't have a media center type PC hooked up to my main living room TV. I know how to do I, and could do it, but it is a lot of hassle and expense when I can just rent/buy dvd's and put them in my already connected DVD player (that, by the way, I don't have to worry about security updates, blue screens, Linux configuration files, hard drive failures, etc.). Maybe as the media pc "appliances" become more common, this will become more of a reality, but I think right now, most people just don't want to watch a downloaded movie. (and don't even get me started on the likely DRM issues that would come with such a service)

Re:well, there is a simple solution for that (1)

jacquesm (154384) | more than 6 years ago | (#21599471)

I don't even have a TV anymore. Ever since the net 'boom' (say mid '95 or so) I've tried to make everything digital and to have only one 'outlet', my PC. There isn't enough material on the 'idiot box' that I find interesting enough to justify having one and files are so much more handy than physical media. I live in the Netherlands, where a 10 Mbit/s DSL line is about $50 / month, it's not cheap but I'm sure they can't be making much money on this particular one :)

Re:well, there is a simple solution for that (2, Interesting)

QuantumRiff (120817) | more than 6 years ago | (#21599783)

I couldn't agree more with you. Now, if Netflix partnered with Tivo, and/or with Apple on the Apple TV, I would buy one in a heartbeat. Imagine the possibilities. For some reason, I think of a movie. I click a couple of buttons, and boom, 5 minutes later (to enable plenty of buffering) i'm watching it on my big TV. No waiting a few days for the mail to arrive, no driving down to the store. Say they had a rule that you could keep them on your Tivo or Apple TV as long as you wanted, but could only have 2 or 3 downloaded at any given time. This would be SWEET!

Re:well, there is a simple solution for that (1)

Firethorn (177587) | more than 6 years ago | (#21599853)

How about, instead of all that, simply having a network capable box that streams video from your computer with the service installed? IE your computer acts as the server, streams it to a box with no HD.

The box would come with the remote and some simple system to browse through and play your media files from your TV.

Apple apparently has something similar, but I was thinking something more streamlined for ~$100-$150.

The box could have anything/everything from coax to component to HDMI.

Re:well, there is a simple solution for that (1)

moosesocks (264553) | more than 6 years ago | (#21599381)

They already do that.

The selection isn't all that fantastic (probably the studios' fault), and it's windows-only for the moment, but it does indeed exist.

I've had Netflix for about a year now, and have virtually no complaints about it. The price is reasonable (it's actually gone *down* since I started), the response time is impressive, and their selection seems to include virtually every Region 1 DVD on the planet... What's not to like?

Re:well, there is a simple solution for that (1)

garcia (6573) | more than 6 years ago | (#21599503)

simply distribute them digitally :) I'm sure that people won't mind downloading them and it will save some $.

It doesn't save me any money (not that I use Netflix) but I don't want to watch movies on my computer and I don't want to move a computer next to my main TV just so shareholders can sustain a profit. Not only that but I'm not saving any money when I have to pay for bandwidth to download those crippled videos. We all seem to forget that having the Internet connected to your house isn't free.

I want a physical medium that I'm free to watch as I see fit and that I can watch at my leisure in a multitude of locations w/o having to worry about DRM (aside from what my players can already handle), bandwidth, Internet connectivity, and whether or not my computer will play it to my TV in an acceptable manner.

YMMV.

Re:well, there is a simple solution for that (1)

slapout (93640) | more than 6 years ago | (#21599661)

One world: bandwidth. I can get more bandwidth thru the US Mail than I can thru my internet provider.

Boiler Room (2, Insightful)

cthulu_mt (1124113) | more than 6 years ago | (#21598887)

Sounds kind of like Blockbuster FUD.

Re:Boiler Room (1)

dammy (131759) | more than 6 years ago | (#21599081)

It is FUD because USPS carriers (and clerks) have to seperate Netflix and Block Buster DVDs into specific trays before it goes to the plant for processing when people are mailing them back. Half the time, neither come in DPS but in raw mail which carriers (and clerks) have to manually hunt down the address in the case to deliver them.

Re:Boiler Room (1)

Faylone (880739) | more than 6 years ago | (#21599349)

Sounds more like somebody who has blockbuster stock and wants more people to buy stock so he can make more money.

Nothing to see here (1, Redundant)

MassD (571162) | more than 6 years ago | (#21598891)

Netflix plans to change their envelopes if necessary... Nothing to see here.. move along.

A Non-Story? (4, Insightful)

pyite (140350) | more than 6 years ago | (#21598901)

So Netflix says they'll change the envelopes. So really it's a non-story as there's no fundamental problem shipping them if Blockbuster can do it without having a surcharge forthcoming for them too.

Re:A Non-Story? (0)

Anonymous Coward | more than 6 years ago | (#21598953)

What if there is a patent on blockbuster's envelopes?

Highly doubtful, but in this day and age?

Re:A Non-Story? (1)

Stewie241 (1035724) | more than 6 years ago | (#21599299)

I find it hard to believe that there would be only ONE envelope design that would work...

Re:A Non-Story? (1)

192939495969798999 (58312) | more than 6 years ago | (#21599007)

Moreover, this type of thing happens all the time as companies test to see how much it will really cost to make a change vs. manual sort of existing product. In many cases, it's cheaper just to let them manually do the sort, depending on conditions. Hence why there are so many manual counters of pills in pharmacies, instead of some machine that just counts the pills.

Re:A Non-Story? (1)

Dan Ost (415913) | more than 6 years ago | (#21599825)

Counting pills is the least important thing that a pharmacist does.

Visually identifying that the pill is the correct kind of pill, recognizing potential dangerous interactions between medications, and catching physician/transcription errors are the kinds of things we expect a pharmacist to do. Some pharmacies do use machines for counting pills once the pharmacist has evaluated the prescription and verified the medication.

Re:A Non-Story? (1)

jellomizer (103300) | more than 6 years ago | (#21599065)

Yea it is always the big brother or big corporation against the little guy... While it is usually Big Brother going "Could you please do this an other way, your current way is expensive and I may need to charge more because of all the problems" If the USPS eats the costs then we will all pay for it even if you don't use netflix in higher postage costs vs. asking the major source of expenses to do some minor changes, that way netflix only has a minor inconvenience, USPS saves money, US Mail Users saves money... So it is an easy fix.
There seems to be this huge effort to find evil and confront it in the world, trying to stop the next Hitler or something, but in the process you find the only way to win is become like Hitler, propaganda machine, grouping people...

Re:A Non-Story? (1)

bartle (447377) | more than 6 years ago | (#21599317)

Very much a non-story. Salon [salon.com] covered this yesterday.

But Steve Swasey, a Netflix spokesman, points out that the report does not mention a key fact about Netflix's deal with the Post Office: Rather than waiting for a postal carrier to drop off and pick up mailers at Netflix's distribution centers, the company itself transports the mailers to regional postal centers.

Because Netflix pays for full First Class mail service, which includes picking up and dropping off, Netflix is paying for a service that it is not using -- which Swasey claims amounts to an extra $100 million per year for the Post Office.

Moreover, the report suggests that the Post Office itself bears some of the responsibility for Netflix's mailers.

In 2002, the Postal Service's engineering department determined that the mailers weren't compatible with automated systems. But the Post office's marketing department gave Netflix the go-ahead to use its mailers, and assured the company that it would "not be subject to the nonmachanible surcharge" for "mailpieces that must be handled manually."

There's more to it than that. (4, Interesting)

doublem (118724) | more than 6 years ago | (#21599383)

The real story here is that the US Postal service is trying to pressure Netflix into changing their envelope design. This means Netflix is shipping so many movies that a flimsy envelope has gotten the attention of the US Postal service and is annoying the heck out of them. A sturdier envelope would no doubt be more expensive, but the odds are that Netflix will just do whichever is cheaper: Pay the extra fee or cough up the extra cash for new envelopes.

The fact that a Blockbuster shill is trying to spin this as some devastating catastrophe for Netflix is just proof of how desperate Blockbuster is, and how badly they're getting nailed by Netflix.

Hmmm, floppy. (-1, Offtopic)

Mikkeles (698461) | more than 6 years ago | (#21598909)

I guess they need V14gR4!

TIRED OF GETTING YOUR FLOPPY RED END CAUGHT? (1)

LiquidCoooled (634315) | more than 6 years ago | (#21598921)

Are you tired of getting your floppy red end caught in the machinery?
If so, try our new improved blockbuster hard edge containers.

Buy now for best results.

Or to reword this... (1)

PinkyDead (862370) | more than 6 years ago | (#21598927)

"NetFlix has no problem."

WTF?

Other factors (3, Informative)

imstanny (722685) | more than 6 years ago | (#21598931)

That's not the only thing. One major factor attributed to eating away at Netflix a Blockbuster's profits are the Kiosks you can find at McDonalds. However, long term outlook is in streaming media. Blockbuster is trying to leap ahead and go mobile with their streaming. Netflix already has a service, which (from personal experience) is really good, if you don't mind watching movies on your Computer...

Re:Other factors (2, Interesting)

Seakip18 (1106315) | more than 6 years ago | (#21599071)

I didn't know Netflix had a movie streaming service. It'd be pretty neat for HTPC setups. I can imagine MythTv getting a plug-in for that, simply browsing your movie list and streaming, maybe downloading it while the ethernet has an idle connection. Doesn't it already allow you to mess with your Netflix account?

Re:Other factors (1)

imstanny (722685) | more than 6 years ago | (#21599339)

Not sure. But the streaming is based on your subscription. I have teh $16.99/month one and I get 17 horus of streaming per month. The hours scale better with higher subscriptions. The only problem is that they have a much bigger catalog than their streaming service. Having said that, they have tons of new TV shows that can be streamed - which is how I spend most of my streaming hours. They also have a lot of movies that you never wanted to spend a movie ticket on, but wouldn't mind watching.

Re:Other factors (1)

99BottlesOfBeerInMyF (813746) | more than 6 years ago | (#21599591)

Netflix already has a service, which (from personal experience) is really good, if you don't mind watching movies on your Computer...

...and your computer is running Windows and WMP.

Re:Other factors (1)

perlwhiz (451770) | more than 6 years ago | (#21599863)

if you don't mind watching movies on your Windows-based Computer...

Fixed that for ya.

Call me a stick in the mud... (1)

RingDev (879105) | more than 6 years ago | (#21599875)

But I don't see streaming video becoming the end-all-be-all answer in the immediate future.

There are still problems with it. Lower resolution, wait times for downloading, DRM restrictions, having to watch on a PC based system, etc...

Some of these can be corrected through technology. Like a 'NetFlix enabled Tivo' where the whole system is integrated into the existing DVR hardware solutions. The wait time isn't horrendous, but if I have a DVD in hand, I can watch it immediately, I don't have to wait 30 minutes from when I pick what movie I want to watch. Even then, with some smart ordering options (remote selection so you can start the download from work, time shifting, and other options to minimize the impact of the download) Resolution is a bad hit though, the better the res, the longer the wait, and who wants to watch a 320i version of a movie on your 54" 1080p HD plasma screen?

Anyways, the whole thing runs into the bandwidth limitation issues currently plaguing North America. As broad band improves, I can see the streaming option becoming better, but I've been hearing promises of consumer fiber since the 80's yet I'm still paying for a POS cable modem connection.

-Rick

Biased? (5, Informative)

samkass (174571) | more than 6 years ago | (#21598951)

It should be noted that this is an analyst who had already rated Netflix a "sell" and Blockbuster a "buy", and was trying to continue to justify his ratings when he wrote this. In reality, NetFlix is very postal service friendly (they pick up their deliveries themselves, for instance, saving the postal service $100M a year), and has already redesigned their packaging a dozen times and could easily do it again if need be.

In other words, this is FUD spread by an analyst who wants to see his predictions about Netflix's stock swings come true.

Re:Biased? (1)

Notquitecajun (1073646) | more than 6 years ago | (#21599069)

AND who owns Blockbuster stock.

Which would be illegal... (0)

Anonymous Coward | more than 6 years ago | (#21599233)

...but perhaps some of his friends/family do.

Re:Biased? (0)

Anonymous Coward | more than 6 years ago | (#21599539)

Then, paid a "News for Nerds" site (Slashdot) big $$$ in order to publish the "news" article under the "fair and balanced" headline:

Postal Service Surcharge Could Slash Netflix Profit

I always knew Slashdot was a slut, but God Damn!

Re:Biased? (1)

R2.0 (532027) | more than 6 years ago | (#21599805)

"I always knew Slashdot was a slut, but God Damn!"

The word you are looking for is "whore" - someone who will spread their legs for anyone in exchange for money. A "slut" spreds their legs to *everyone* for free.

Re:Biased? (1)

onehitwonder (1118559) | more than 6 years ago | (#21599787)

Kudos to samkass for noting the way the analyst has rated the two stocks and to all the slashdot readers who saw the guy's quote for what it is: FUD. I'm a happy Netflix subscriber and I don't want to see the company tank for something as stupid as its envelopes or because of some analyst's bias.

Hmmm... (1)

93,000 (150453) | more than 6 years ago | (#21598963)

1. Get Blockbuster envelope
2. Make similar design but w. Netflix logo
3. Continue to profit

Non-story in my opinion.

Re:Hmmm... (1)

techpawn (969834) | more than 6 years ago | (#21599385)

More like:

1.Tell investors to sell Netflix and buy Blockbuster
2.Write a FUD article saying that something going to destroy Netflix profits (with a side note that Netflix will fix the problem if needed)
3.Profit

communication breakdown... (2, Insightful)

JimBobJoe (2758) | more than 6 years ago | (#21598967)

Unless this story is lacking on important detail (which I suspect it is) I can't help but feel that there was a major communications breakdown.

According to the article, USPS blew $40 million manually processing Netflix mailers, but apparently didn't bother talking to Netflix and saying "hey...uhh...can you help us out here.?"

so what, they'll change - again (3, Informative)

boguslinks (1117203) | more than 6 years ago | (#21598981)

Netflix has changed the envelope repeatedly [cnn.com] so I doubt they'll hesitate to do it again if not changing would cut per-subscriber profit by 2/3...

Unless Blockbuster has patented "envelopes that don't gum up Postal Service machines".

Re:so what, they'll change - again (0)

Anonymous Coward | more than 6 years ago | (#21599311)

In my opinion, they need to change the envelope anyway. I've gotten two broken disks from them in as many weeks. Sure, they ship a replacement immedietely when you report it - but it's still annoying.

42 million dollars (2, Insightful)

hansamurai (907719) | more than 6 years ago | (#21599037)

This has cost the USPS an extra 42 million dollars over the last two years and they're just complaining about the floppy edges now? It seems odd that this wasn't brought up a long time ago considering Netflix relies on the USPS for distribution and not keeping them happy means not keeping their customers happy. Seems like USPS could have just said, "See this no floppy edges on the Blockbuster envelopes? Do it like that. Now." 42 million dollars is a rather large wake up call.

Re:42 million dollars (0, Troll)

botkiller (181386) | more than 6 years ago | (#21599459)

Not when that 42 million dollars is eventually going to come out of Taxpayer money, y'know.

Has anyone mentioned that the blockbuster envelopes use a lot more paper than the Netflix ones? I get that they're "not as floppy", I'm glad that's a technical term now - but using a heavier paper equals more paper used, and I certainly doubt that Blockbuster gives a rat's ass about their mailer being environmentally friendly in any fashion. Probably not, since this article is mostly supposed to make me buy blockbuster stock, or make me switch to Blockbuster because my membership dues could go up with Netflix. I wouldn't do EITHER, because blockbuster's mail service SUCKS, have you ever been in a Blockbuster? Fifty copies of "Jingle all the way", and nothing worth a crap to watch. Now go online. Netflix's selection is a million times better, and they actually have films that I care to watch rather than nothing but the usual Hollywood schlock. Catch on earlier, USPS - and consider at the same time that Netflix is probably bringing more business to the USPS than they realize or want to admit, being that, when was the last time you wrote a snail mail letter to your friend in New York? Oh, never? Hmmm... but emails have nothing to do with that, right?

Also someone mentioned making the online distribution more available, both companies need to learn something when it comes to that - Netflix's online service only works with Windows machines, period, because it uses windows DRM. I don't even know if Blockbuster has one, but it would probably be the same. Any and all movie distribution services on the net need to learn that you can't just expect us all to own windows machines to download and watch movies LEGALLY on the net.

Re:42 million dollars (0)

Anonymous Coward | more than 6 years ago | (#21599859)

The USPS is a pseudo government agency, so rather than wait until 42 billion dollars has gone by like any fully government agency would do, they only say something until 42 million is spent. They'll just raise rates again to compensate from the lost money.

ooh (0)

Anonymous Coward | more than 6 years ago | (#21599039)

net neutrality for snail mail. Will the /. mob lynch the USPS?

Netflix does have to be manually handled (1, Informative)

Anonymous Coward | more than 6 years ago | (#21599105)

In my short tenure in the post office in the area where freshly received mail would be brought in for processing, we would have to manually remove the netflix envelopes (all being envelopes sent back to netflix after the customers watched). Since the DVD portion of the letter is not balanced, leaving the large flap of paper to cause problems in the canceling and sorting machines. However, Blockbuster's envelopes do not have this problem as the DVD is left in the center leaving very small flaps that do not cause problems.

the math? (1)

Some_Llama (763766) | more than 6 years ago | (#21599123)

I agree that they can just change the envelopes, seems like the simplest answer, but even if they paid a "surcharge" how does 17c extra per envelope translate into a 70c reduction in profit?

Re:the math? (1)

jcronen (325664) | more than 6 years ago | (#21599199)

Remember that the envelopes go both ways, so it would actually be 34c "loss" per envelope. But the point still holds...

Re:the math? (1)

LiENUS (207736) | more than 6 years ago | (#21599303)

Subscribers to netflix pay per month, not per dvd average 2 dvds per month and you're looking at 68c extra cost per month per user.

Re:the math? (1)

OrangeTide (124937) | more than 6 years ago | (#21599357)

Customers don't pay per movie, they pay a flat monthly fee. If your average customer is renting 4 a month, that's 17c * 4 = 68c. Probably only 17c coming in to netflix, I assume it's presorted going out from netflix and thus not a problem.

Re:the math? (1)

One Louder (595430) | more than 6 years ago | (#21599453)

It's explained in a better article that the 70 cent drop is in operating income per subscriber per month, not per movie, which would seem to imply that an average Netflix subscriber rents four movies per month.

Title should read ... (1)

queldor (1184789) | more than 6 years ago | (#21599131)

Postal Service Surcharge Could Force Netflix To Change Their Packaging *Again* or Postal Service Surcharge Could Force Netflix To Copy Bockbuster Packaging

I hate their envelopes! (0)

Anonymous Coward | more than 6 years ago | (#21599133)

They don't fit into the outbound mailbox at my apartment complex.
I have to fold the edges and hope it doesn't get jammed inside.

I quit the service in part because of that. Hope they change them...

Re:I hate their envelopes! (1)

OrangeTide (124937) | more than 6 years ago | (#21599457)

I just fold mine and jam them in. No need to quit the service until you actually have a problem. Being paranoid about jams and then never having one seems a bit irrational to me.

Punch card history, anyone? (1)

ThreeGigs (239452) | more than 6 years ago | (#21599157)

This is begging a reference to the 'cut corner' on punch cards.

Man, I'm showing my age.

Summary (3, Informative)

Spleen (9387) | more than 6 years ago | (#21599181)

USPS: Hey Netflix can you change your envelopes so they won't jam our machines?
Netflix: Why should we?
USPS: We'll charge your $0.17 per envelope to process them manually?
Netflix: We'll change our envelope.

Is there really more to this? I would think Netflix would want the post office to be able to more efficiently process the mail. The faster it's processed, the faster it can be loaded on a truck and heads out. If the mail is delayed due to manual processing, Netflix customers are going to be less satisfied.

Re:Summary (1)

TooMuchToDo (882796) | more than 6 years ago | (#21599223)

I would even go as far as to say that Netflix wouldn't say "Why should we?" Anything that benefits both parties would be looked on as a big incentive. If the postal service can process the envelopes faster, DVDs get to/from people quicker, and Netflix can continue to add subscribers without service problems (at least at USPS, their distribution centers are a different story).

Re:Summary (1)

Shados (741919) | more than 6 years ago | (#21599239)

I agree. The only reason Netflix didn't change yet is either because they didn't know, either because no one told them they "have" to (Have to meaning: either that or surchage your butt).

Its such a simple thing to change, this is a non-story.

Re:Summary (2, Insightful)

R2.0 (532027) | more than 6 years ago | (#21599957)

It's slightly more complicated - the enveloped machine sort fine on the outbound trip, but had a tendency to jam up the machines on the return trip, because of improper hand sealing by the end user. I won't defend the design, but the problem is only half as bad as implied.

Compounding this, the local post offices were doing the special handling ad hoc - after enough machine jams they said "screw it - pull all of the Netflix customer returns and hand sort." On an individual post office basis, no big deal - but when summed across the organization it adds up. Probably also the reason it took so long for USPS to notice - each local post office was just dealing with it themselves and not reporting it as a systemic problem.

Not news, investment opportunity (1)

wattrlz (1162603) | more than 6 years ago | (#21599217)

Netflix is going to dip this afternoon, rebounding in afterhours and early tomorrow when people realize floppy envelopes can be stiffened with minimum capital outlay.

Pre-sort your own mail (1)

westlake (615356) | more than 6 years ago | (#21599283)

Boston.com reports that Netflix Inc may suffer a cut in profits if the US Postal Service starts charging extra to manually sort the envelopes that carry its DVDs.

Our NPO does bulk mail pre-sorts for the military and others.

The return address may say Kansas or Kentucky. But the postmark will be upstate New York.

The disabled workers go home with a decent supplement to their monthly SSI or disability check and access to a free dental clinic and other services. The client saves a bundle on mail handling and postage.

Don't change the envelopes, change the deliverer (3, Interesting)

dada21 (163177) | more than 6 years ago | (#21599297)

Maybe it is time to seriously consider revoking the monopoly provision that the USPS has in terms of being the only legal first class mail deliverer. The last time this was seriously proposed and enacted was over 150 years ago [lysanderspooner.org] . That one competitive business put the USPS to shame and lowered prices and increased quality (as competition does).

I still can't figure out why we're accepting the postal service when there are many more companies that provide better service for other forms of mail (priority, ground, freight, etc). Even the USPS uses FedEx for their International Express service.

The USPS has one big problem: it can not compete well. It's run by bureaucrats who know they'll get paid regardless of service levels or prices. UPS and FedEx woo my businesses regularly (we mail a ton of stuff), and the prices haven't changed much even with fuel surcharges and the rest. I get an amazing rate for local deliveries of packages under 8 pounds, and it all ends up landing next day just via ground delivery.

I really haven't heard one good reason why we can't let competition into the first class mail market. Yes, the Constitution provides for the Federal Government to maintain mail delivery, but it doesn't actually say they should be the only providers. I'd think the USPS would do fine for remote areas of the country, and the big boys would bring prices down, and service up, by entering the market that desperately needs help.

Re:Don't change the envelopes, change the delivere (1)

timster (32400) | more than 6 years ago | (#21599581)

I'd think the USPS would do fine for remote areas of the country

Therein lies the rub. Delivering mail to Alaska costs way more than 41 cents or whatever it is now. Rural routes are just not very profitable.

Any private competitor would focus on urban delivery as it's far cheaper, and they certainly would charge less than the USPS. That would force the USPS to greatly increase delivery rates as the remote delivery would no longer be subsidized by urban delivery. Or we'd be spending a bunch of tax money to subsidize the USPS, which wouldn't exactly be free market competition.

So it's not going to happen -- remember, Alaska has *two* senators. As does Montana, North Dakota, and every other rural state.

Re:Don't change the envelopes, change the delivere (2, Insightful)

dada21 (163177) | more than 6 years ago | (#21599761)

Oh, I don't doubt that rural deliveries would be more expensive -- but that's the responsibility you accept when you decide to move further away from urban areas. More gas to go places, more costs for communications (digital and physical), less choice in what you can buy locally, etc. The upside is more privacy, possibly more personal security, etc, etc.

I serve some churches in Alaska, and my shipping charges via FedEx are more expensive, but not that much more. I recently shipped an 8 pound package to Alaska and I believe the charge for FedEx ground was around $20. Shipping the same package to California is around $8. Considering the distance, that's not a huge price difference. Since the market sets prices based on supply and demand, it would make letters to Chicago cheap, and letters to Alaska expensive for me. That's normal, but how many people are mailing things to Alaska to begin with, compared to Chicago?

Re:Don't change the envelopes, change the delivere (1)

daveo0331 (469843) | more than 6 years ago | (#21599849)

So tax the private first class deliverers to pay for the USPS to deliver stuff to Alaska for 41 cents. You'll at least be introducing competition in the urban market and making that more efficient, even if the rural deliveries still have to be done by the government.

Re:Don't change the envelopes, change the delivere (1)

romrunning (963198) | more than 6 years ago | (#21599847)

I think the infrastructure is a little bigger than FedEx/UPS really want, plus suddenly they would be faced with hiring a lot more "drivers" for a lower per-item profit. Drivers are already paid substantially (like everything else, much higher w/more years of svc), and now you would need even more to deliver the much larger amount of mail (a bulk of which would potentially be low profit to them). Have a larger force of newer drivers would drive down wages for the drivers, and the unions would try to force wages to go up, thus lowering the profit even more for the carrier. So I would think, why would they bother?

Faulty math (0)

Anonymous Coward | more than 6 years ago | (#21599373)

$1.05 - $0.17 - $0.17 ?= $0.35

Related to net neutrality (3, Insightful)

noidentity (188756) | more than 6 years ago | (#21599379)

This gives a good contrast with net non-neutrality. In this case, the envelopes (apparently) cost more to process than the postal service planned on. That's understandable since it's a fairly new thing to be shipping such mass quantities, so the postal service hasn't yet made a new category to cover it. So this isn't the postal service attempting to charge a customer more simply because the customer is making more money than another customer shipping the exact same envelope. Contrast this with net non-neutrality where the carrier wants to charge more to the more popular company per bit simply because that company has deeper pockets or is more profitable than some other company also transporting bits through the carrier.

Re:Related to net neutrality (1)

Volante3192 (953645) | more than 6 years ago | (#21599615)

Except it really does cost more (using the equation "Time = Money") to process the Netflix envelopes.

It doesn't cost more to process a packet sent to Port 80 than it does over 23, 443 or 6667.

Call me a curmudegon, but... (1, Offtopic)

9re9 (803270) | more than 6 years ago | (#21599433)

It's always bothered me that my tax dollars were going to subsidize the business model of a publicly held company. Even if they fix their envelopes, they're still benefiting from using the low cost delivery provided by the federally subsidized postal service.

Block buster does have a better envelope... (1)

ProfanityHead (198878) | more than 6 years ago | (#21599533)

It never reaches the postal service. They just *say* it does.
This guy must have an agenda if he recommends BB over Netflix.

change the envelope (1)

Ranger (1783) | more than 6 years ago | (#21599607)

Netflix should go ahead and change it's envelope anway. They'd save a lot of paper.

I already watch a few movies online.

Let's Hope Netflix Changes Envelopes (2, Interesting)

ryanisflyboy (202507) | more than 6 years ago | (#21599799)

I personally think the NetFlix envelopes are horrid. I've had them come in various stages of destruction to my home. Ripped edges, torn open, etc. Nearly every envelope we get looks like it was jammed in some sort of machinery... that is until about three weeks ago. It looks like the postal service changed tactics and is manually sorting NetFlix envelopes to keep their equipment running smoothly. I've had no problems with torn envelopes since then. Perhaps the postal service is simply wanting to be paid for the problems NetFlix envelopes cause.

Other than that, I'm a huge NetFlix fan and hope they can work this out. The last thing they should want to do is make their delivery channel angry. Their business depends on it. I had naively imagined the problem was solved because NetFlix was working with the USPS. Let's hope the NetFlix managers figure out they need to be nice to the postal works. You DO NOT want to make your mail man angry! TRUST ME!

Network Neutrality (2, Funny)

Nom du Keyboard (633989) | more than 6 years ago | (#21599943)

What we need is Postal Network Neutrality, and we need it now!
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