It's hard to measure exactly how much the shipping problem is costing Netflix, but it's big. Larry Dignan on ZDNet: "The tab is roughly $1.8 million to $3.6 million in revenue a day, according to Citi analyst Tony Wible."
The real cost depends on the length of the outage, customer defections, and how Netflix compensates customers for the service disruption. Last time they were down they issued a 5% credit, but this is a much longer outage, and they just upgraded many customers as part of the Netflix settlement.
Why is this "costing" Netflix? Netflix will just refund services it did not provide. It is not like taking money from Netflix's pocket.
Posted by: | August 14, 2008 at 11:42 PM
Well, Netlix usually gives more back than is lost. Like that 5% they gave a while back.
Don't forget the OT for the workers they've got trying to fix the issue. plus any hardware/software upgrades.
Posted by: josh | August 15, 2008 at 01:49 AM
I wonder if knowing that no discs would ship, it they sent their shipping/receiving staff home? If they get things up and running, maybe they can call them in on Saturday.
Posted by: kolohe61 | August 15, 2008 at 02:24 AM
Of course it costing NetFlix - I can't believe I am actually taking part in this but I just have to put my 2 cents in - a lot of the comments I have been reading on here, or on Netflix, or wherever, really makes me sad to be part of the human race. Get your fat asses off the couch and off the computer and do something constructive and/or athletic instead of waiting around for a movie to ship to you - go to the movies if you need to - you obviously have a television - tell me you can't find anything to watch to keep your mind more inactive then it already is - geez people, lighten the f up.
Posted by: jjfromnyc | August 15, 2008 at 09:29 AM
Actually, seeing as no movies shipped for two or three days, consider the savings in postage that will be realized over the delayed shipments…
I highly doubt it will cost Netflix anything to issue credits to all the affected customers.
5% of $50 is only $2.50… So at .78¢ a pop to mail one movie… Well do the math ;-) They will probably come out ahead.
Keep in mind also that many high paying positions are salaried, so there wont be as much "over time" paid out as one might think. Just longer work days.
Posted by: 2McAbre | August 15, 2008 at 09:53 AM
@ first poster: Netflix and every other business makes a plan based on the revenue it expects to receive. If they have to refund part of the $16.00 or whatever I pay per month, that's a cost.
If you're a salaried worker and your employer sent you home for a week with no pay, that costs you, right? Even though you "just didn't get paid for services you didn't provide."
For me, this outage isn't that big a deal, even though it's disc 1 of *The Wire* that I'm waiting for. Netflix does a good job and I'll cut them some slack. If they give me a refund I'm gonna ask them to take it back.
Posted by: Paul | August 15, 2008 at 10:05 AM
"If you're a salaried worker and your employer sent you home for a week with no pay, that costs you, right? Even though you "just didn't get paid for services you didn't provide.""
Salary workers get paid whether there's work or not, just as they don't get overtime when extra work id needed. That's what salary is.
SDo no, "workers they've got trying to fix the issue. plus any hardware/software upgrades." probably don't get over time either because they are salary.
Posted by: | August 15, 2008 at 12:43 PM
Just heard, NF will be issuing 15% credit.
Posted by: | August 15, 2008 at 12:45 PM
The credit issued by Netflix probably won't cover what the customers lose. The last time something like this happened to me, I only received 5 discs during the week. I always receive 10 discs per week. So they issued me a single credit for an extra movie. One movie when I lost 5? Netflix you can take that kind of compensation and stick it where the sun doesn't shine.
Posted by: JT | August 15, 2008 at 01:21 PM