Reed Hastings Interview

`Consumers are very social and they want to talk about movies'

Q. How did the Hollywood studios react to you in 1999? How did you present Netflix?

A.We tried a number of things, none of which worked until we hired (industry veteran) Ted Sarandos. He knew all the right people. They trusted him. They knew each other. They all had a network of friends that went back 20 years. Ted was able to put those (revenue-sharing) deals together within a year with all the studios. It was very much a hire-the-right-person strategy as opposed to camp-out-on the-doorstep.

Q. How do the studios treat you now?

A. In the first two or three years, the studios were tolerant. And to the degree that they supported us, it was because they wanted more competition in the rental market. Which makes sense for them. And so they were supportive perhaps more than our economics at that time justified.

Now they love us because we do such a great business for them on the hard-to-market films. So, ``Spider-Man 2'' we carry. We have it. Everyone has it. We're not adding any particular value to it. But then, you go into Sony Classics, we do a huge business.

Q. As you examine your innovator's dilemma -- creating a new way of doing business that others attempt to copy -- which companies do you look to for inspiration?

A. The studios know, Wal-Mart is always going to sell more of your DVDs and make you more money. So treat 'em well. But we're going to be the passion brand that helps grow the whole category.

Q. Blockbuster and Amazon are the near-term threats to Netflix. What about long-term threats of video on-demand services?

A. ...the profit on a DVD sale is about $14 to the studio. Whereas VOD or Internet downloads, it's $1 or $2 to the studio. That's why it makes economic sense for the studios to protect DVD sales.

Q. Many analysts predict Netflix will be forced to sell its online service to a larger media company to survive? Is that the case?

A. In the near term, over the next couple of years, we're a strong independent company leading the DVD rental business. As the development of Internet delivery comes, it may be that we need to be part of a Viacom, a Disney, a Yahoo, to compete effectively. We'll see at that juncture. But in terms of the DVD rental business, we're strong, profitable, have $175 million in cash, no debt, we have no need to be part of someone.''

excerpted from MercuryNews.com | 02/27/2005 | San Jose Mercury News.

A Blockbuster Campaign Can Be as Good as Gold

Los Angeles Times is talking about how studios spend millions of dollars campaigning for Oscars, advertising their movies to Academy Awards voters. Why?

"Winning an Oscar still means a spike in theater ticket sales. And with DVD sales and rentals now representing more than 60% of a studio's revenue, spending even as much as $15 million on an Academy Award campaign can be a good investment. In this 15-minute culture, Oscar is one brand that lasts.

"That money comes back in spades in terms of more rentals, more sell-through [video purchases], more television fees…. The bottom line is those awards have a life probably as long as that statue," said Russell Schwartz, president of marketing for New Line, which took home a bushel of Oscars last year for the third part of its "Lord of the Rings" trilogy.

This means all the nominees and winners will have "long wait" status on Netflix and other online DVD rental services, unless they're smart and buy more copies. Read more about Oscar campaigning (registration required)

Hacking Netflix has links to where the Oscar winners and nominees appear on Netflix, so you can add them to your queue. You might also want to check out the Independent Spirit Awards, which are better, in my humble opinion.

Blogging Distribution Center

The Netflix distribution center in Lansing, Michigan has its own (unofficial) blog!

Oscar-nominated shorts viewable online--TODAY ONLY

VIA GreenCineDaily you can view five of the Oscar-nominated live-action and animated shorts at Salon.

Hacking Netflix pulls out all the stops

Please peruse Hacking Netflix, which has a plethora of posts for this penultimate day. Then get back to work.

Paramount speeding up DVD releases

Netflix's New Plan: Be Like Dell, from Business 2.0

Netflix has new price plans

Netflix ad on Yahoo for $11.99 plan.

Cool Google Movie Hacks.

Netflix Lifetime Membership for those who need it least

Celebs Get Tons of Goodies at IFP Independent Spirit Awards
via KGET 17

This makes me crazy: Part of the goody-bags that presenters get at the Independent Spirit Awards is a Netflix Lifetime Membership. See the rest of the list.

The 2005 IFP Independent Spirit Awards premieres live on The Independent Film Channel (IFC) at 5pm EST and is edited for rebroadcast on Bravo the same evening at 10pm EST/PST, following an exclusive one-hour red carpet show at 9pm EST/PST.

Netflix Throttle Banner

I don't believe in "throttling". Netflix has stated that they prioritize sending discs out, when there aren't enough of one title on one particular day to go to everyone who wants one, to users who have not received their first choice a lot lately. However, this is a hoot. I found the link on Manuel's blog.

Attention, Netflix! Listen Up!

This is for you, Netflix:

"Internet experts say some blogs are adept at synthesising public opinion and can be a powerful force that companies ignore at their peril."

"easy-to-use blogging software and powerful search engines are now creating vast and efficient "word of mouth networks" on which tens of millions can compare information."

"'If companies don't understand that and don't learn how to track what people are saying, they are going to be hit violently with PR problems that they don't understand or know where they are coming from,'says Robert Scoble, a Microsoft employee who writes a popular tech blog."

"Some executives have started their own blogs to proselytise about their companies, while others are responding by hiring one of an increasing number of intelligence firms that monitor online traffic.

But Mike Masnick, chief executive of Techdirt, one such firm, says most companies are oblivious to blogs and those that are aware do not know how to respond.

He believes the best strategy is to engage bloggers openly and honestly in their realm. Any whiff of insincerity will be picked up and turned against a company."

"'It's the new world and you want to be part of the conversation,' says Mr Scoble. Mr Masnick is quick to agree. 'Companies that don't recognise this are going to get bitten,' he says. " Read the rest at Financial Times (registration required)

A memorable, but not rememberable, movie

via roanoke.com: "A friend who subscribes to Netflix
is always looking for titles to add to her list. So, when I saw this movie, I thought, 'I need to tell her about this one!'
Next time I saw her, I positively gushed. 'I saw the greatest movie the other day! You have to add it to your list!' 'Great,' she said. 'What's its name?' "

It's right on the tip of her tongue. Read more.

Netflix Freak 2.0 adds profile support, more

via MacCentral:: "The Little App Factory has released Netflix Freak 2.0, a major upgrade to the Mac OS X application to help Netflix subscribers manage their queues. Netflix is a mail-order DVD rental service. New features in the 2.0 release include support for Netflix Profiles, a relatively new feature of the service that lets subscribers set up separate queues for each member of their household." Read more

Reed Hastings regrets going public

via The New York Times
ON GOING PUBLIC

IN retrospect, Mr. Hastings wishes he had waited longer to go public. By the time the investment bankers were willing to sell shares in Netflix, the company was no longer desperate for the $94 million it ended up raising in its initial public offering.

"In hindsight, what triggered Amazon and Blockbuster to compete with us is they could see how profitable we were and how fast we were growing," Mr. Hastings said. It has also meant that Mr. Hastings is constantly fending off analysts and commentators who are convinced that long-term survival requires that he sell the company to a large suitor to ward off the competition.

Netflix has $175 million in cash and is carrying no debt, Mr. Hastings noted, and it has "no desire or need to be acquired."

ON VIDEO ON DEMAND

Mr. Hastings anticipates that it will be 2010, if not 2015, before a lot of the movie-watching public is downloading films over the Internet. Mr. Hastings is convinced that the same features that draw people to his DVD rental service will induce them to use his service to download digitally delivered movies. Netflix has devoted millions of dollars to building an easily navigated Web site while it refines a complex software system that recommends movies based on customer ratings.

"If we differentiate the Web site well enough, with rating histories and other features consumers want, that's our strategic leverage" once people start receiving movies via the Internet, Mr. Hastings said.

Online Movie Rental Battle Review

HardwareGeeks.com has updated their "Online Movie Rental Battle Review", in which they compare the major DVD rental services. They used to prefer Blockbuster over Netflix, but now, they're calling it even.

New Netflix subscriber experiences lost disc during trial period

Matt writes to me

“Hi Becky,

I've read through your blog, good one BTW, and Hacking Netflix.
It looks like the going rate for "buying" a disc from Netflix is $20. This is my situation: I signed up for the free trial, about half way through one of my disc doesn't show up on the return trip. If I cancel and the disc doesn't show up for 7 days after cancellation they charge me for it. I assume $20. If I stay on and give it another month to show up it only costs $18 and I get more movies as well. This is what I wrote to Customer Service:

Subject: Help with Your Account

I returned a DVD on Tue, the 15th. My 14 day free trial expires Sun. the 20th. I have to wait 6 days to declare a disc "lost" which would be the 21st. I would like to cancel my account, but if the DVD doesn't show up in 7 days after cancellation, will I be charged for the DVD? If so how much? I feel like I'm being forced into continuing my subscription. I am not at all pleased with this situation.

Thank you for your quick reply,

Matthew

and here is their response 9 minutes later!!

Hello Matthew,

Thanks for your message.

If you mailed back your movie more than 6 days ago and you have not received an email confirmation that your movie was returned, please click on "Report Problem" on the Rental Activity section. After you have clicked "Report Problem", simply follow the instructions on the next page(s) to report the title as "Returned but Netflix has not received it". This action will place a notation beneath the title stating "DVD reported as missing" under the "Movies You've Rented" section of the Rental Activity Page. Once it is received by our warehouse this notation will be removed. We apologize for any confusion this may have caused.

Per the terms of cancellation, outstanding rentals must be received by Netflix within 7 days of cancellation, or we'll automatically charge a replacement fee for the unreturned DVDs.

As a courtesy I have extended your return date by an additional 7 days.

If you have any further questions or concerns, please feel free to contact us.

Thanks,

Scott,
Netflix Customer Service

As you can see they plan to charge me if the movie doesn't show up and "have extended your return date by an additional 7 days". I have reported the movie as lost and canceled my subscription as of today, Sun, 20th. If after about 10 days if the disc has not shown up I plan to restart my membership and let them charge me $18 for another months movies and wait for the lost one to return. Any advice is welcome. I'll let you know how it goes.”

My reply

“Dear Matthew,

Thanks for writing. I'm glad you are enjoying my blog.
I'm sorry I don't have any advice regarding your situation, but my experience with Netflix has been very good regarding lost discs. In one year and over 200 discs, I've never had a lost disc that stayed lost. They always turned up eventually. However, I have had to pay for a broken disc.

May I have your permission to post this entire email on my blog?

Thanks,
Becky”

Matt replies to me

“I really hope this disc shows up. I feel like I'm playing by the rules, but I would rather spend the money on another months membership than pay for a disc. Which begs the question. If I
was a member for 3 years and "lost" 4 discs during that time, when I cancel all my discs have to be returned in 7 days or pay for the discs. What is the statute of limitations?? Do I now
have to pay for all the lost discs??

Matt”


Netflix writes to Matt

Lost Disc Report

Dear Matthew,

We're sorry to hear that Hellboy was lost in the mail. Unfortunately discs do go missing during shipment from time to time, so it is our policy to accomodate for the occasional disc lost during shipment. According to our records, you have reported the following disc(s) as lost in the mail: Date Reported Title 02/20/05 Hellboy If we receive any of these movie(s) from the post office, we'll let you know as soon as they arrive. If you've requested a replacement copy, it will be shipped to you as soon as possible, otherwise, your next movie should be on its way soon. We apologize for the inconvenience.

-Your Friends at Netflix

Netflix Membership Cancelled

Dear Matthew,

Per your request, your Netflix membership has been cancelled, effective 20-FEB-2005.

Please return the following titles by their specified due dates: Due Date Title
Feb/27/2005 The Mask (1994)
Feb/27/2005 Category 6: Day of Destruction (2004)

We hope you enjoyed the service and will consider returning some day.

Movie Received

Your Queue is empty

We've received Hellboy, but since your Queue is empty, we can't send you your next DVD. Please come choose some movies so we know what to send you next. Hellboy Our records indicate that you previously reported this disc lost. We wanted to notify you that we have since received it.

My conclusions

Based on Matt's experience, we may conclude that you should report lost discs as lost right away, if you are planning to cancel before six days elapse. Netflix apparently removes that lost disc from its calculations, so they do not expect you to return it after canceling, nor will they bill you for it.

Lots of new Netflix jobs

A Netflix keyword search on Monster.com reveals lots of opportunities.

Netflix is hiring Operations Managers in Gaithersburg, MD, Santa Ana, CA, Cleveland, OH and elsewhere.

They are also using temp agency, Volt Services, to hire operations associates for Phoenixville, PA and Santa Ana, CA, and a customer service representative for the Netflix call center in Sunnyvale, CA.

Reminder: today is a Postal Holiday

According to the USPS Postal Holiday Calendar, today is Washington's Birthday, also known as President's Day, and all Federal Offices are closed. This means no Netflix today.

Vote for Netflix on UrbanDictionary.com

UrbanDictionary.com allows you to submit new slang words with your definition. You get to vote on the ones you like the most. I've submitted a couple of definitions for Netflix. Please vote on your favorite. It'll make me feel good.

My Netflix Queue Stats

In honor of the first anniversary of my Netflix membership, here are my Netflix queue statistics:

208--Number of movies I've rented from Netflix since I joined.
380--Number of movies in main queue
5--Number of movies I have out
21--Number of movies in "DVDs Awaiting Release" queue
65--Number of movies I've rented in the last 3 months
0--Number of movies labeled "Very Long Wait and Out of Print”
2--Number of movies labeled "Very Long Wait"
0--Number of movies labeled "Long Wait"
3--Number of movies labeled "Short Wait"
0--Number of movies in the queue that are actually television shows on DVD
6--Number of movies in the queue that I've already seen
0--Number of movies I feel are categorized wrongly
21--Average number of times I check the queue per week

Respect Copyrights

Netflix Fan does not endorse copyright violation. I do not encourage people to use their Netflix account to obtain DVDs for the purpose of copying copyrighted materials. I believe people and corporations have a right to own their own property, a fundamental belief which distinguishes American democracy from communism. Thank you for remembering the rights and freedoms for which our friends, family and forefathers fought and died.

For more information, visit RespectCopyrights.org

When I was in school, I was the one who wouldn't let you copy my homework.

Free alternative to Netflix

Your public library. This link happens to go to the New York Public Library, but I'm sure you have one nearby.

Q: How are free things not really free?

A: Opportunity costs, mainly inconvenience: parking, locations, hours, and selection.

SBC to offer video on demand

Per MSNBC , telecom giant SBC plans to offer broadband subscribers the ability to download up to three mvoies at a time to their digital video recorder and replace them when they are finished viewing them for a flat fee of about $18 per month, later this year.

The Netflix reaction: "A Netflix spokeswoman said the company does not believe SBC and others will represent a significant threat to its basic business for at least five years. That's not because of technological barriers, but economic ones.

'The studios have an exclusive window on DVD rentals and DVD sales. The money they make on rentals is far more than they make on Internet delivery of movies or content,' said Shernaz Daver, spokeswoman for Netflix. 'If you look at Comcast or anyone, what they are offering to date to be downloadable is their old content -- their collection -- not their newest releases.'

Daver said the company believes that while Internet deliver will eventually emerge as an important method of getting films to customers, DVD's will remain the primary form for the remainder of the decade because that's where studios can make the most money.

'DVDs will remain the predominant mechanism for delivery for the next five years,' she said noting Netflix has nearly 3 million customers and an offering of 30,000 titles. 'That's not something that any of these companies can offer today. Can they do it in the next five to 10 years? Probably, and that's the reason we are going to be offering some kind of digital media this year.' "

CustomFlix Establishes Premiere Distribution Opportunities

via IBC News:

"CustomFlix today announced it has extended its On-Demand DVD Publishing service to now offer members distribution opportunities with top retail and rental programs including Walmart.com, Wal-Mart DVD Rentals, Amazon.com Marketplace, Amazon.com Advantage, Netflix, CinemaNow, GreenCine, Froogle, and Yahoo!Shopping.

An industry first, CustomFlix has put in place a series of programs and relationships that streamlines access to top worldwide rental, retail and online video-on-demand distribution companies. CustomFlix members have the opportunity to include their title for consideration by all of these top companies in one step via the new CustomFlix Connect program.

"Content owners and independent producers want to get the best exposure and placement possible for their films," said Geoff Grant, independent filmmaker of The Journeymen, the first-ever modern tennis documentary made with circuit pro's including Andre Agassi, Boris Becker, and Goran Ivanisevic. "CustomFlix Connect makes that possible. The CustomFlix turnkey service offered everything I needed including on-demand DVD production and fulfillment. Thanks to CustomFlix, my film The Journeymen is now available at Netflix, Amazon.com and other sites."

If you have a microbudget indie horror film or such, you can contact CustomFlix or Netflix to see about distributing your film through them. Cool.

Netflix board member doesn't use BitTorrent

I learned ,via the Venture Capital Blog at BusinessWeek Online, that Netflix board member Rich Barton is the founder of Expedia.

Expedia and NetFlix have something in common—they both changed whole industries. Do you know anyone who doesn't buy plane tickets online? I don't. And that includes my low-tech parents who have now mastered the nuances of HotWire. In another five years, you may not know anyone who pays late fees either. Barton sees similar opportunities still looming across the net. Media is a big one. "We have all this broadband and I can't get old episodes of Seinfeld on the web. That is wrong and it won't last," he says.

[I reckon he ain't heard of BitTorrent, eh?--B]

Here's the complete list of Netflix directors
Reed Hastings, Netflix
Richard N. Barton, Founded Expedia, Inc. in 1994 and was its President, Chief Executive Officer and director from November 1999 to March 2003
Timothy M. Haley, Redpoint Ventures
Jay Hoag, Technology Crossover Ventures
A. Robert Bob Pisano, Screen Actors Guild National Executive Director and Chief Executive Officer
Michael N Schuh, Foundation Capital

Nothing on the big screen worth watching? Netflix to the rescue

January and February are the traditional dumping grounds for bad movies in theatres. This is a good time of the year to rely on your Netflix queue for your movie fix. Phoebe Flowers, of the South Florida Sun-Sentinel, briefly reviews five recent movies you might have missed, which are available on DVD, to help you fill the winter movie doldrums.

How it works--with typos

Netflix has a new section under their FAQ (frequently asked questions) called "How it works", which illustrates step-by-step how the online DVD rental-by-mail service works, and answers some very basic questions. It contains two typos. Under "How much does it cost?", it says the 3-out plan costs $29.99 (it really costs $17.99). Under "How fast will I get my DVDs?", it says there are 30 shipping centers, but it has a little map of the U.S. with only 20 dots on it. The whole thing is really pushing the 5-out plan, for some reason.

And in case "How it works" doesn't work, they kindly offer you their customer service number.

Still have questions?
Please contact our
Customer Service
department at:

1-800-585-8131
Mon-Fri 6am - 7pm PST
Sat-Sun 6am - 2:30pm PST

**update: this version of How it Works is not the one you get to via the main welcome screen. I found it via the press room.

Blockbuster in two kinds of trouble

Hacking Netflix is reporting that the FTC is examining Blockbuster's hostile takeover bid of Hollywood Video, to possibly block it, and attorneys general are investigating Blockbuster's "no late fees" advertising, because it may be deceptive.

Average Turnaround Time by Throughput

I've been trumpeting Listology's Netflix Tracker for months now, because I'm so excited about its potential uses. The Netflix Tracker is collecting data from currently active Netflix subscribers, who report when they receive or return discs to Netflix. Jim has finally decided he has enough data to draw some interesting conclusions. He has designed a brilliant report which shows what turnaround time we experience in relation to how many discs we rent from Netflix over the last three months. It's called the Average Turnaround Time by Throughput report.

Canadian Netflix clone Zip.ca celebrates one year anniversary

Via Canada NewsWire Group:

"I can definitely say we wouldn't be where we are today without our loyal Zip.ca members. Thanks to their support, we are about to ship our one millionth DVD at some point in the next week or so," continued Anderson. [Tiny compared to Netflix, which ships three million per week--B]
...
Zip.ca offers Canada's most extensive DVD library (over 26,000 titles and growing) and best prices for DVDs rentals. Zip.ca provides members with 24/7 online convenience for creating and managing their own personal ZipLists of must-see DVDs, and daily delivers thousands of DVDs right to members' doors across Canada. For a low monthly membership fee, Zip.ca provides unlimited DVD rentals, with no deadlines, no late fees, and free two-way shipping."

Reed Hastings sound byte regarding Blockbuster's "no late fees"

VIA Reuters: "Netflix CEO Reed Hastings calls Blockbuster's policy 'a sign that we are really setting the agenda in the video rental business and they are reacting. It's not really 'no late fees.' It's the 'Blockbuster automatic purchase program.''"

Netflix distribution center in Baton Rouge, LA is tiny

Hacking Netflix found this article, with photo, describing the process our movies go through at Netflix's Baton Rouge, Louisiana, distribution center, which opened September 1, 2004. The article says it's a typical DC, processing between 3,000 and 30,000 per day and employing eight people in an office setting, not a warehouse. According to Netflix's own fact sheet, the average DC processes 20,000 per day (3 million per day/30 distribution centers/5 days per week). They pick up their mail in the morning and drop it off in the afternoon after scanning it all in by hand.

If you have given your significant other a Netflix subscription for Valentine's Day, you may visit the link and read the rest of the story.

CinemaNow Unveils a New Chapter in Television Viewing

Netflix is already working on using Tivo as a device whereby you can get Netflix movies downloaded to your TV, so you can get movies on demand, without having to wait for the DVD to come in the mail. This article, via eHomeUpgrade, recommends that video-on-demand service CinemaNow does something like that, because if you use their service now, you have to watch the movie on your computer, unless you've networked your computer to your TV.

"Home networks and broadband content services still intimidate people, or even worse... consumers don't understand why they even need a network, as noted by a recent research study by Harris Interactive. But hope still remains. I think if CinemaNow wants to breakdown the barrier the company needs to partner with cable/satellite providers and integrate their service into the set-top box.[emphasis mine] Think of it as “enhanced” video-on-demand where cable/satellite subscribers can order past episodes (not to mention CinemaNow's entire movie rental library) through the interface they're already familiar with."

I hope Netflix beats them to it.

the Long Tail of Netflix

Chris Anderson discusses a concept he defines as the Long Tail, which is a marketing term describing the phenomenon we're experiencing now, with Netflix. "Unlimited selection is revealing truths about what consumers want and how they want to get it in service after service, from DVDs at Netflix to music videos on Yahoo! Launch to songs in the iTunes Music Store and Rhapsody. People are going deep into the catalog, down the long, long list of available titles, far past what's available at Blockbuster Video, Tower Records, and Barnes & Noble. And the more they find, the more they like. As they wander further from the beaten path, they discover their taste is not as mainstream as they thought (or as they had been led to believe by marketing, a lack of alternatives, and a hit-driven culture)...

For too long we've been suffering the tyranny of lowest-common-denominator fare, subjected to brain-dead summer blockbusters and manufactured pop. Why? Economics. Many of our assumptions about popular taste are actually artifacts of poor supply-and-demand matching - a market response to inefficient distribution." Read the rest at Wired.com.

Netflix, with it's efficient distribution system, is allowing everyone to have their own virtual video store, stocked with just the movies the fit their peculiar taste. We don't have to fit the mold anymore.

There are any number of equally attractive genres and subgenres neglected by the traditional DVD channels: foreign films, anime, independent movies, British television dramas, old American TV sitcoms. These underserved markets make up a big chunk of Netflix rentals. Bollywood alone accounts for nearly 100,000 rentals each month. The availability of offbeat content drives new customers to Netflix - and anything that cuts the cost of customer acquisition is gold for a subscription business. Thus the company's first lesson: Embrace niches.

Netflix has made a good business out of what's unprofitable fare in movie theaters and video rental shops because it can aggregate dispersed audiences. It doesn't matter if the several thousand people who rent Doctor Who episodes each month are in one city or spread, one per town, across the country - the economics are the same to Netflix. It has, in short, broken the tyranny of physical space. What matters is not where customers are, or even how many of them are seeking a particular title, but only that some number of them exist, anywhere.

Anonymous comments

I'm a big fan of free speech and all that jazz, but I'm tired of anonymous posters making snarky comments on this blog without any accountability at all. I have disabled anonymous commenting, so from now on, you'll need to have a free Blogger user name and password in order to comment. Thank you for your support.

The perfect gift for a Happy Chinese Lunar New Year!

The Year of the Rooster begins February 9, 2005. Is it a coincidence that Netflix uses red envelopes and that people give each other gifts in red envelopes for the Chinese New Year? I don't think so.

Via JapaneseWeddingFavors.com

Traditionally, the Chinese red envelope holds lucky coins often called I ching coins or small precious gifts for gift giving. The red envelope is given to bring good luck, prosperity and happiness to the recipient. Red is the symbol of happiness and ultimate joy, thus the color red is used for all celebrations including weddings and Chinese new year.

You can buy your authentic Chinese red envelopes here, or you can give a gift subscription to Netflix :).

For more about the Chinese calendar, and the New Year celebration (Spring Festival), visit the China Page.

Be who you are

It's also available on Netflix if you want to check it out.

Answers.com on Netflix

See information on Netflix using Answers.com, a new way to get around the Web.

Netflix distribution centers

From a discussion on Fool.com's Netflix message board, and Listology.com, I have concluded that Netflix doesn't maintain a physical location at each of the places on the following list (they officially claim only 30 distribution centers). There's not a one-to-one relationship between PO box addresses and distribution centers. I believe they use a drop-shipping method (a money-saving way of mailing by delivering mail in bulk to a postal facility close to the addresses in the mailing). You may have a Netflix PO Box address on your return envelope's label which doesn't seem to match the DC, because the DC code is for a "metropolitan area" which might be served by several drop boxes. It could be that Netflix sends a truck from each DC each morning to several area post offices to pick up discs for a central processing point, and in the afternoon, drops off the next batch.

As we've heard in the past, Netflix processes discs both by hand and machine. I reckon that a large metropolitan area like New York or Chicago would have a central DC that uses a machine to read, scan, label, and sort all the discs for the region. Such a machine would be too expensive, and unnecessary, for every DC to own.

The following list of Netflix distribution centers was collected by Listology's Netflix Tracker . Where there is more than one city listed side-by-side, I believe more than one PO box address is being used for the same DC code. We still have too many DC codes missing because not everyone who uses Listology has verified their DC's code.

1. Austin, TX (need code)
2. Baton Rouge, LA (BR)
3. Bedford Park, IL (need code)
4. Birmingham, AL/Duluth, GA (DUL)
5. Carol Stream/Chicago, IL (CHI)
6. Chattanooga, TN (need code)
7. Cleveland, OH (CLE)
8. Columbia, SC (COL)
9. Coppell, TX (DFW)
10. Daytona, FL (need code)
11. Denver, CO (DEN)
12. Flushing, NY (FLU)
13. Fresno/Bakersfield, CA (need code)
14. Ft. Lauderdale, FL (FTL)
15. Gaithersburg, MD/Easton, MD/Harrisburg, PA (GAT)
16. Greensboro, NC (GB)
17. Hartford/Worcester, MA (WOR)
18. Honolulu, HI (HI)
19. Houston, TX (HOU)
20. Indianapolis, IN/Bowling Green, KY/Louisville, KY/Dayton, OH (LOU)
21. Kansas City, MO (KC)
22. Lakeland/Tampa/Ft. Myers, FL (LAKE)
23. Lansing, MI (LAN)
24. Las Vegas, NV (LV)
25. Manchester, NH (need code)
26. Minneapolis, MN (MN)
27. New Brunswick/Newark, NJ (NWK)
28. Oklahoma City, OK (OKC)
29. Orlando, FL (need code)
30. Paducah, KY (need code)
31. Phoenix, AZ (PHX)
32. Pittsburgh, PA (PITT)
33. Richmond, VA (need code)
34. Rochester, NY (ROCH)
35. Salem, OR (SAL)
36. San Francisco, CA (need code)
37. San Jose, CA (SJ)
38. Santa Ana, CA (SA)
39. Southeastern/Philadelphia, PA (PHIL)
40. St. Louis, MO (STL)
41. Stamford, CT (need code)
42. Tacoma, WA (TAC)
43. West Sacramento, CA (SAC)

You can find your DC code on your return label. If you would be so kind, please check this list for your code, and if it's missing, email it to webmaster at listology dot com.

UPDATE 1-09-06 I've re-posted this list of Netflix distribution centers, including mailing addresses, which used to be on Wikipedia.

Netflix "throttling" makes the evening news in San Jose, CA

KGO-TV (broadcast channel 7) of San Francisco, Oakland, and San Jose investigated customer's complaints of "throttling" on their news feature 7 On Your Side with reporter Michael Finney.

Netflix responded to these complaints in an e-mail to 7 On Your Side, stating...

"Our goal is to provide a high level of customer service and operate a financially sound business. Depending on inventory and number of shipments to be processed, heavy users of our service might experience a slight delay in receiving movies."

Read more

This is similar to, but more explicit than, the message Manuel, who blogs on My Netflix Journal, had posted that he received from Netflix customer service which confirms that Netflix is deliberately giving lower priority to shipping discs from your #1 queue position, or lower priority for one-day turnaround, if you are a high-volume renter. This is known as "throttling" in the Blogosphere.

Here's what they said:

Dear Manuel,

Thanks for your message.

In determining priority for shipping and inventory allocation, we give priority to those members who receive the fewest DVDs through our service. As a result, those members who receive the most movies may experience next-day shipping and receive movies lower in their Queue more often than our other members. By prioritizing in this way, we help assure a balanced experience for all our members. Those that rent a lot of movies get a great value and those with lighter viewing habits are able to count on our service to meet their limited needs.

If you have any further questions or concerns, please feel free to contact us.

Thanks,
*******,
Netflix Customer Service

This raises the issue of limited versus "unlimited". What are the legal ramifications of using that word? Can a business use the word "unlimited" in their advertising, if they are going to give higher priority service to lower-volume users? Is making someone go to the end of the line, the same thing as limiting their access to the service?

Netflix competitor Amazon Unveils Loyalty Shipping Program

via The Street.com

Amazon is offering a customer loyalty program which costs $79 per year, and for which you receive free two-day shipping or overnight for $3.99. In other words, you'll break even after your ninth purchase. The article asks if this is Amazon's way of preparing to take on Netflix in the online DVD rental business.

Blockbuster plans hostile takeover of Hollywood Video

via Reuters.com

Netflix rival Blockbuster is going straight to Hollywood Video shareholders with an offer of $14.50 per share, in a bid to takeover the company against its Board's wishes. Read more

Netflix advertisements are part of spyware

I sent the following message to public relations at Netflix via email on January 27:

"A Web site named pcpitstop.com alleges that Netflix uses a business called Gator/Claria to advertise its service. This business allegedly installs spyware or adware (unwelcome software) called GAIN, on Web users' computers, against their full knowledge and consent. Can you verify or confirm for me whether this is true? If you disagree that GAIN is spyware or adware, could you explain to me why? Can you confirm or deny the nature of your relationship with Gator/Claria?"

I haven't received a reply.

According to PCPitStop.com, Netflix is one of the top 20 advertisers utilizing Claria to distribute their ads. They obtained the information from documents filed with the Securities and Exchange Commission.

This tidbit about Claria comes via the L.A. Times:

"The businesses most often accused of distributing spyware, including privately held Claria Corp., WhenU Inc. and 180Solutions Inc., say they are providing legitimate "adware" services to customers who approved the installation. But their disclosures are often misleading or buried: A recent Claria license ran for more than 60 electronic pages, first mentioning the phrase "pop-up" on page 18."

Maybe a Netflix employee who reads my blog can help me clear up this issue.

Netflix is 30% of indie film rental market

Via The Documentary Film Weblog , which quotes an article from Forbes in which Ted Sarandos says Netflix has single-digit market share, but 30% of independent movie rentals.

The figure could be higher now. This is from a year ago.

Shabbir's Diary reviews Netflix Profiles feature

Shabbir's Diary has a nice review of his experience using the new Netflix Profiles feature.

Netflix did a bang-up job today

I returned five DVDs yesterday. I knew better, but I did it anyway. We were iced in this past weekend :). Anyhow, Netflix received all five today, and shipped four more. One is shipping tomorrow. I'd say that's pretty good. According to my account history, I have rented 21 discs from Netflix in the last 30 days. I've rented 65 in the last 90 days. Shouldn't they be "throttling" me? I just want to say, the Greensboro distribution center is the BEST.

Netflix competitor GameZnFlix, Inc. Opens Distribution Center in Sterling, Colorado

via Yahoo news"The company has been experiencing outbound shipping delays due to the demand on its limited inventory and the delays in delivery time through the Postal Service. We have been increasing the inventory to meet the demands and by opening the Colorado center we expect the delivery times to improve. National Fulfillment Inc. will continue to handle our fulfillment needs from Gordonsville, Tennessee for the East Coast and Rancho Dominguez, California for California, Washington, Oregon, Alaska and Hawaii."

They plan to open another one in the Northeast U.S. in 2005.

Netflix promises video on demand this year

Via the San Francisco Chronicle:

"A major initiative for Netflix sometime in 2005 is the planned premiere of video on demand, considered the future of movie viewing. Users will be able to download films over the Internet rather than having to wait for them to be delivered by mail.

Only a limited number of movies are going to be available at first, [NetFlix founder Reed] Hastings said. He added that initial customer interest will be modest, but then grow every year until the end of the decade as more films become available and more households get high-speed Internet connections.

Several Internet companies such as Movielink and Cinemanow already offer online movie downloads. Cable companies have had equivalent services over their lines for several years.

'Two years from now, I think we'll be looking back more at how Netflix handled the challenge of video on demand than how it responded to Blockbuster, Amazon and Wal-Mart,' [Mark] Mahaney, [an analyst for American Technology Research] said. "

The Internet Stock Blog: ticker: NFLX

I don't post about Netflix from an investment point of view. I know next to nothing about investing. I'm a movie fan, primarily, and I love how Netflix empowers me to find the movies I want. I don't intentionally report on stuff here that might affect the value of NFLX stock, so I recommend you check out Internet Stock Blog for that info.

The Internet Stock Blog has a NFLX category, which gathers the latest investment-related news about NFLX. It is a "readers' digest" of articles from sources all over the Web, like Motley Fool to Marketwatch. The latest is about how "Netflix' stock traded up 15% after the company's results and conference call" on January 24. You can read more here.