You can still rent The Postman Always Rings Twice through Netflix (NASDAQ:NFLX), but just don't expect it to arrive on Saturday.
The U.S. Postal Service announced this morning that it's canceling Saturday mail delivery. The move isn't exactly a surprise. The USPS is losing a lot of money, and eliminating weekend postal deliveries was floated as early as last year.
There's plenty of room to debate the merits of the move itself. Will consumers miss checking their mailboxes on Saturday? Is this merely the beginning now that spammers have turned to email and legitimate bill collectors have migrated to online banking payment solutions?
However, this is a move that for better or worse will have an impact on Netflix.
Now, it's true that DVDs are no longer the company's flagship business. Nexflix now has 33.2 million streaming subscribers and only 8.2 million disc-based renters. Folks relying on Netflix for DVDs and Blu-ray discs continue to shrink with every passing quarter, having gone from 11.2 million to 8.2 million over the past year alone.
As one of those 8.2 million members, I'm going to need a new strategy. I would routinely send an outgoing DVD on Saturday. It's been the only way to assure access to a hot new Tuesday release without having to wait weeks for it. I also occasionally send back a flick on Thursday so I have something to watch on Saturday.
That's the bad news for Netflix. The process will get slower, making it that much less valuable than it used to be. Netflix spent years building out a network of distributions centers so that most customers can get overnight deliveries at regular postal rates. Now the process will take longer when Saturdays are involved.
The move also opens the door for DISH Network's (NASDAQ:DISH) Blockbuster and Coinstar's (NASDAQ:OUTR) Redbox to capitalize on the mail-less Saturdays. Sure, Blockbuster's a dinosaur. DISH Network has been closing hundreds of stores, as it too suffers the same decline in demand that Netflix is feeling these days. Redbox has been able to grow its business, largely given the value proposition of its $1.20-a-night DVD rentals.
One can also interpret this as a positive for Amazon.com (NASDAQ:AMZN). The leading online retailer not only offers up new releases as pay-per-view rentals -- something that Netflix incredulously does not -- but it will still be able to offer Saturday package deliveries if someone needs a DVD so bad that it's worth buying.
It won't be all bad news for Netflix. It will probably be saving money here. Customers will likely now go through fewer movies in their unlimited rental plans every month. Since Netflix foots the roundtrip postage, having four or five fewer days a month that are free of deliveries or the mailing of returns will add up over time.
Netflix will be just fine, even if DVDs and mail in general continue to fade away.