Cash-strapped and in the red to the tune of several billion dollars, the U.S. Postal Service is looking to raise rates early next year. Among the proposed hikes would be a 7% to 8% fee increase for items such as DVDs and books. Netflix, one of the USPS’s biggest customers, would take a $50 million hit on top of the hundreds of millions it already spends annually on postage if the proposed increases take place, estimates NewTeeVee. And Netflix is just fine with that, says a company spokesperson.
Netflix spokesperson Steve Swasey said the following about the potential rate increases:
“We are supporting the postal service with all of its proposed changes, not just one in a vacuum . . . We believe a stronger postal service with affordable rates is better than a weakened service.
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They needed to make some changes.”
While Netflix is gradually moving away from its core DVD-by-mail business as its streaming service picks up speed, the company still continues to foresee growth in the by-mail sector for the next few years.
Should Netflix’s apparent support for the proposed postage increase be filed in the “What could they do about it, anyway?
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” box? Could these higher shipping costs be passed along to customers in the form of increased Netflix subscription rates?
(via NewTeeVee and Home Media Magazine)
Personally, I use Netflix to rent WWE DVDs and some older movies, which can’t be found elsewhere. Looks like i’ll have to take the eventual price increase and roll with it.
Why is the plane upside down?
I think some famous peole are known for liking to do that as part of their tricks back in the day.
That would be an “Inverted Jenny”.
Thanks. I see now. Looks like it’s worth more than blockbuster at this point.
Just yesterday I bought 10 books of the Forever stamps–stamps that sell for today’s stamp price but should/when postage rates increase they become the value of the rate increase of the new stamps. Why can’t Netflix, in anticipation of the postage rate increase, work something out with the Post office NOW to buy bulk postage at today’s rate that will assume the value of the increased postage rate when it takes place?
Not going to snail mail anything . I use electronic mail for my mail:P
I have no problem, as a recent Postal retiree, supporting the USPS. I kind of resent your using the Post Office to try to shine a better light on Redbox. Factor in the gas money involved and the number of trips required to pick up and return a DVD, and I think the postage is a moot point.
Dennis, no need to feel resentment as a Postal retiree. This Post is about how a postage increase might have a positive or negative affect for Netflix (who have to pay/depend on the Post Office for their business) and its’ subscribers. Common sense suggests a 7% or 8% postal increase will negatively affect Netflix because the way for Netflix to immediately absorb the increase will most likely be to pass the increased cost on/raise subscription rates. This will make Netflix subscribers ‘unhappy’, resentful, perhaps give Redbox a try–not good for Netflix. Since Redbox doesn’t mainly depend on the Postal System for it’s business, this becomes an advantage for Redbox (makes it shine) as a Netflix competitor. This analogy/strategy is no different than how YOU factor in the cost of gas for Redbox users in your thought that Netflix might be a better deal (might shine better as a dvd rental competitor) because its business doesn’t involve gas usage/costs. During the extreme gas hike when average was between $4-$5 dollars a gallon, everyone theorized that if sustained this would have a negative effect for Redbox and its users, and therefore, a positive effect (increase in subscribers) for Netflix with a business model that wasn”t that affected by a gas rate hike. Just bloggers giving their thoughts of possible effects of a postage hike on Netflix, and possibly its competitors. Nothing to feel resentment about as a recent Postal retiree. :-)
If Netflix chooses to pass on the extra postal increase costs to the consumer, Netflix might suffer a drop of subscribers but I don’t think it would phase them. And I know there’s a lot of people who wouldn’t seriously be bothered by it either, especially if you’re getting at least 12 DVDs/month anyway, then you’ve done pretty good.