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Your Movie Is in the Mail. Or Not.
Netflix has recently been making a big push into streaming movies over the internet. But its main business, rental movies by mail, is experiencing a serious problem at the moment.
The company says it has had a severe disruption to its shipping system. No DVD's were shipped on Tuesday, only some on Wednesday, and none as of midday today. A third of its 8.4 million subscribers are affected. Its Web site and streaming are still up and running.
It is the first time in the company's 10-year history that it has had more than one day of shipping interruptions. Steve Swayze, a company spokesman, says that it is a technology issue that affects all 55 of the company's distribution centers, but that the company does not know the root cause of it yet. Engineers have been working around the clock.
"It's not been a couple of good days for Netflix," he says.
The outage comes at a bad time for the company, which has been showing signs it can grow despite fierce competition from online download services like Apple's and DVD rental services like Blockbuster's. Late last month, NetFlix reported a nearly 4 percent in quarterly earnings, good subscriber growth, and lower subscriber-acquisition costs.
Netflix apologized in an email to its subscribers, saying that it would issue a credit to its account. "We received a DVD back from you and should have shipped you a DVD, but we likely have not," the email says.
Jim Goldman of CNBC, who broke the news of the outage, says compensation could be costly. "With so many users affected, that could add up, and in a hurry," he said.
