It’s no secret that the United States Postal Service (USPS) is hurting. So much so that the organization has unveiled a massive, multi-billion dollar cost-cutting plan to allow it to remain viable and hopefully return to solvency. The plans cuts, while beneficial for the USPS, could have a major impact on DVD-by-mail providers such as Netflix and Blockbuster by Mail.
David Williams, USPS’s VP of network operations, said the following about the proposed plan:
“The proposed changes to service standards will allow for significant consolidation of the postal network in terms of facilities, processing equipment, vehicles and employee workforce and will generate projected net annual savings of approximately $2.1 billion . . . This is part of the overall savings expected from the network optimization initiative, which is projected to save up to $3 billion by 2015.”
Part of the plan involves eliminating first-class, next-day delivery of many items—including DVD and Blu-ray mailer envelopes. The move would delay millions of Netflix and Blockbuster by Mail movie shipments by at least a day in most cases. Netflix, despite its major shift towards streaming, remains the USPS’s largest individual commercial mail client, with postage expenditures topping $500 million annually.
Would Netflix need to lower the prices on its DVD plan to make up for the delays? Could the USPS’s move usher in the DVD-less era more quickly? Let us know what you think in the comments.
(via Home Media Magazine)
I think that this will just push more users to streaming. Hopefully they focus more on quality contact though!
Postal employees are overpaid and over-benefitted, and many Congressional districts are overserved with pork-barrel facilities. These blood-in-the-streets proposals place the interests of today’s and yesterday’s PO employees above the nation’s future but will accelerate USPS’s obsolescence. Requiescat in pace, USPS. Savings could be achieved by ending Saturday delivery, thus eliminating the need for substitute carriers, and shutting down a lot of unnecessary post offices, but our c___n s__t pols aren’t going there.
Try to work a day as a mail carrier and you will not feel the same.
Netflix, Gamefly, all of them would suffer greatly. So be it. I’m tired of my tax dollars going to this waste of money dept.
The post office does not recive any tax money
@ rick
“The post office does not receive any tax money”
True, but the USPS is a quasi-government agency and is exempt from anti-trust legislation and rate increases, like all public utilities have to be approved by a regulatory commission and rarely are denied or even questioned.
Secondly, the all levels of government need the USPS to act as a conduit to all mailing addresses for contact reasons. Therefore, delivery costs get skewed. As an example send mail to those in the armed forces is operated as a loss.
USPS has asked for a rate increase each of the last 3 years and has been denied by Postal Regulatory commission. Who ya’ crappin’?
@ tobychili
Exactly, the USPS has a history of rate increases during the last few decades. I remember as a kid, 15-cent stamps for first-class mail, but during the past few years has been denied same. This is why its accumulated operating loses are *now* so great.
I can’t really see Netflix dropping prices. Basically, USPS would be doing some of their disc-throttling for them, so at best I see a possible easing of disc-throttling.
I don’t see why they can’t just lower prices to compensate. If a stamp costs the same, and all deliveries take 2x as long, just cut the prices in half and it’s the same.
Or offer 2 DVDs at a time for the current cost of 1 DVD at a time.
Lord knows they could use the good publicity from doing it, and they would lose absolutely nothing. They’d still be shipping the same number of DVDs every month to the customers for the same cost, but from the customer perspective they’re getting twice as much for free and not getting screwed over by the post office.
Of course, the idea is so good, Netflix will not do it. Instead, they’ll put out a press release about how it’s just the the cost of a chai latte.
There’s a whole ‘nother possibility. Netflix/Blockbuster/et al could say the hell with the USPS and go with a private carrier. Most people think of FedEx and UPS for overnight delivery, but I think DHL still does domestic overnights in the US too. If a company cuts an advertising deal with DHL to get a competitive rate (Bob’s DVD by mail, brought to you by DHL!) it could be a win win.
@CA
Unfortunately, the USPS handles many of the private couriers “last 5-mile” deliveries. It’s doubtful that any of the commercial carriers would want DVD delivery business at any price.
Fedex, UPS , private couriers are not supposed to put deliveries in a mailbox. Delivery instructions of a tiny parcel specific to each home are a logistics nightmare.
Could the USPS’s move usher in the DVD-less era more quickly?
Yes, and as mail delivery approaches its end-of-cycle phase, it will be more expensive as well.
i could see the postal service ending monday deliveries since all holiday are celibrated on mondays. it would save money but it wouldn’t bother the people getting mail.
4th of July, Vets day, Christmas , New Year , Thanksgiving not always on Monday. Millions of businesses open and depending on Monday delivery. Horrible idea.
I feel it goes deeper than just this,
and goes to the core of the USPS system,
and that is the “workers”…
uhhh, excuse me, I have had 2-3 bills
delivered to me as much as 3 weeks
later… and all “crumpled up and dirty
like someone stepped on it….
I do fear there is “internal” silent mutiny
going on within the USPS system….
Oh yah, and complain?
see how far that will get you…
NO THANKS!!
I do all my bills by “billpay” on the internet,
safe, secure, and instantaneous, with no talkbacks or sorrys.
(And Please, do say that you have a “firewall” installed on your computer system”)
Would I trust my DVD’s to be delivered by snail mail? NOT.
The handwriting is on the wall and it is
written in “bytes”.
I am considering dropping my DVD portion of Netflix this month. I used to receive my mail by noon, watch the movie and have it back in the mail by 5. I moved to a new place 2 months ago and my mail now arrives…. whenever (never before 3 pm, sometimes at 7 pm). I can no longer get the DVD back in the mail by 5, so I’ve dropped from watching 3 movies/week to 2 if I’m lucky. If the PO further delays delivery, there is no way I would keep the service.
I’m just around the corner from a Redbox & BBX kiosk, and with all the free codes I receive, I’m better off going the Kiosk route.
If Netflix is USPO’s largest commercial customer, then it seems that any move that reduces that customer’s usage of USPO would ultimately result in less revenue for USPO….
So, wouldn’t they just be just trading expense for less profit? Doesn’t sound like a very profitable cut to me….
Randy , you couldn’t be more correct. That’s why some members of Congress(not that they are blameless) are asking for PMG to be fired.