EfluxMedia

Netflix, the largest on-line rental service for DVDs in the United States, was given an ultimatum by the U.S. Postal Service to change the mailer or charge an additional 17 cents a mailer in order to cover the additional costs of approximately $21 million a year that add up to the labor services – as every package requires to be manually handled.

In the meantime, Blockbuster, Netflix’s biggest competitor, seems to have no such problems. According to Karen Raskopf, the spokesman for Blockbuster, they “looked carefully at the design of our envelopes and we worked with the post office to make sure they could go through the machines and that the DVDs would be safe”.

Although the issue hasn’t been discussed by any of the Postal Service officials, Steve Swasey, a Netflix representative, stated: “"We're in full compliance with U.S. Postal Service regulations and specifications […] If the specifications of the post office were to change, we would change the mailer as necessary. We've already gone through 40 to 50 iterations of the mailer since Netflix started shipping DVDs a decade ago.” He also added: “We save them about $100 million a year. We pick up the returns from the post office. They are not delivered to Netflix, even though we're paying for it.”

However, Netflix could not afford to charge 17 cents a mailer that easily. It doesn’t seem much, but it has been calculated that it would reduce its income by 67 percent. Steven Swasey says: “Even if there is some validity of the cost of hand sorting to the post office, it is more than made up for in the costs we're saving the post office every year.”

Netflix has to comply with the U.S. Postal Service regulations and redesign their mailer, but that doesn’t seem to stop a company that announced the delivery of its billionth DVD at the beginning of 2007.