Netflix Inc. (NASDAQ:NFLX) was rooting for the success of the U.S. Postal Service in 2010 when it was last in the headlines over financial trouble. But now that the company has been working to dramatically expand its streaming video options – including now airing some of its own original content – it might actually be a good thing for Netflix’s bottom line.
There have been a couple of stories floating around that have been investigating the effect of the U.S. Postal Service’s recently announced decision to drop Saturday delivery – and why not check in on Netflix Inc. (NASDAQ:NFLX), which is considered the Service’s top client i recent years? Netflix does pay a little more overhead to mail out DVDs to homes, but has seen a number of subscribers drop the mail delivery in favor of the video streaming option when the company split up its two delivery options into separate subscription plans. Just before the subscription change, Netflix boasted nearly 25 million DVD subscribers. Now, the company reports less than 8 million such subscribers, and the streaming video subscriptions are now more than 27 million in the U.S.
Netflix Inc. (NASDAQ:NFLX) has been expanding into other markets like the U.K., Canada and Latin America, but the company does not offer the DVD option to those areas. The estimate is that Netflix may spend $300 million postage in 2013 and perhaps as little as $200 million next year. And with one less delivery day, it might be more difficult for DVD subscribers to get as many DVDs each month as they are used to; and with fewer DVDs being mailed out may mean that the company may get more profit on its $8 monthly subscription.
The bright side about the DVD subscription is that the latest theatrical releases are available more quickly on a disc than on video streaming, and the licensing fees that Netflix Inc. (NASDAQ:NFLX) has been paying for acquiring the streaming capability has been increasing for the company.
What do you think? Will Netflix Inc. (NASDAQ:NFLX) come out ahead, and how do you think the customers and investors will fare with this USPS decision? We’d like your thoughts in the comments section below.
DISCLOSURE: I own no positions in any stock mentioned
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