Netflix may benefit from discontinued Saturday mail

Unable to get DVDs, subscribers might opt for online video
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People waiting for Social Security checks to arrive in the mail on Saturdays are a trifle upset with the idea that the U.S. Postal Service might stop Saturday mail service. People waiting for DVDs from Netflix (Nasdaq: NFLX), meanwhile, will probably just move over to online video--which wouldn't be a bad thing for the streaming services provider at all.

Netflix is the Post Office's biggest customer, which means it still spends a lot of money to send DVDs through the mail, according to a Bloomberg story. That means it also could stand to gain the most if it had to stop paying to ship DVDs on Saturdays and could start pointing still more subscribers towards online video streaming.

"Netflix… got 50 percent of its fourth-quarter operating profit from its DVD-by-mail business," but this year, DVD service will be 20 percent of revenue, with the figure declining to 10 percent by 2015, Piper Jaffray Cos. Analyst Michael Olson told Bloomberg.

The dollars make sense, a story in L.A. Biz suggested. Netflix is cutting back on postal spending--$600 million in 2011, $300 million in 2012 and probably $200 million in 2013--and "[s]light delays in DVD mailings will likely be filled with streaming content, so there is unlikely to be much of an outcry about the lack of Saturday service," the story said.

Other players, most notably Amazon.com (Nasdaq: AMZN), could also benefit from the change--or not be affected, depending on how you look at it--because despite their big online business, they still ship lots of packages, and packages will still be delivered on Saturdays, Bloomberg noted.

"I think this could actually increase the opportunity for EBay and Amazon to expand their same day delivery pilots," Wedbush securities analyst Gil Luria told Bloomberg.

For more:
Bloomberg had this story
L.A. Biz contributed this story

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