The End Of Saturday Mail Delivery Is Awesome For Netflix, Not So Much For DVD Customers

While there are plenty of people greeting the looming end of Saturday mail delivery with a shrug (“Less junk mail on the weekends, awesome!”) there are those out there who see the change as a significant upset in a valued service. They are the DVD-by-mail customers, the ones who try to squeeze every bit out of their subscriptions. And yes, some people do still get DVDs. Ahem.

For those who don’t pay for cable or satellite TV services, using online streaming services like Netflix and Hulu is all well and good. But if you want to see a new release and can’t buy it on demand, the DVD subscription can be the way to go.

That’s the case for Consumerist reader Todd, who has his two-at-a-time Blu-Ray disc routine down pat to make sure he has a movie to watch over the weekend and then another during the week.

He writes:

At the moment, with Netflix’s same-day turnaround time for rentals and USPS’s current six-day delivery service I can receive and enjoy two BD rentals per week, on Wednesdays and Saturdays. At my current subscription rate of $9.99, receiving two rentals a week means my average cost per rental is approximately $1.25. This is a tremendous value!

He adds that even he sometimes slacks and lets discs sit around for a bit, but that on average he manages six rentals per month. He’s on top of his stuff, for sure.

But that’s all going to change, as the Associated Press is astute enough to note as well. It’ll change for the better for Netflix, as it has fewer DVD subscribers than it used to and as such, doesn’t have to worry about ticking as many people off while shelling out less cash to send mail on Saturdays. Todd is well aware of this, as well as the downside for him.

Unfortunately, when USPS implements its new five-day delivery service, if I were to completely maximize my subscription I would immediately lose on average one rental per month that I currently enjoy. However, in practice this will impact me to a much greater extent: I like to watch a Netflix rental every weekend. This is something that my current subscription allows me to do while also enjoying another movie during the week. But come August if I want to continue watching a Netflix BD rental every weekend, then I will be forced to receive only one rental per week. This effectively devalues my subscription by half, at a cost of $2.50 per rental.

We know what some readers will say — boo hoo, get your movie delivered a day earlier, save it for the weekend, or whatever. Even the AP writes the change off as affecting such a small part of Netflix’s customer base that it’s like, whatever!

“Complaints are more likely to come from subscribers who try to watch as many DVDS as possible each month — an unprofitable audience for Netflix anyway,” writes the AP, noting that this year the company only has 8.2 million DVD subscribers, in contrast to its 27.1 million streaming subscribers.

But the fact is, Todd and those other 8 million customers will be paying Netflix the same amount of money for less service. If customers like him and yours truly are able to watch fewer DVDs for the same monthly price, that’s a slight uptick in profits for Netflix, even if some subscribers ditch the DVD-by-mail service in light of the change in mail delivery.

While we’d like to say we hope Netflix will take this into account and adjust its subscriptions to reflect the end of Saturday delivery, it’s probably a long shot. It doesn’t have much impetus to do so, as right now it costs an estimated $300 million in postal expenses with Saturday delivery, a number that could shrink to just $200 million next year. Save $100 million or make a small chunk of customers happy?

Netflix Could Gain From Loss of Sat. Mail Delivery [Associated Press]