Netflix has changed the face of entertainment. Their online DVD Rental service has put a major dent into many a DVD rental companies profit. However, while Netflix was pursuing big dreams, they forgot one minute detail.
The United States Postal Service.
Netflix uses these really cool envelopes to exchange the DVDs with the customers. Evidently everybody was happy with the design and process, leaving some people wondering "why didn't I think of this before?"
USPS doesn't like them, though. The mailers are not "machine friendly", and the USPS is prepared to slap a fine on Netflix for their past-crimes... $0.17 per envelope. Not that bad, right?
In total, Netflix is looking at $41,900,000 worth of past fines. If Netflix doesn't resolve the issue, they are looking at an additional $61,500,000 worth of fines over the next two years. What would these fees do to Netflix's profit? What profit? In total, this would kill 67% of their profit, and destroy their biz model.
Uh oh.
It's sad how even the smallest detail can kill the grandest of plans. An assumption, an oversight, a misunderstanding. These can weaken or destroy even the strongest of relationships. Sad thing is that if Netflix had addressed this issue years ago, they would not be in as deep as they are now.
The smallest detail can fester into a business-crippling issue, if it's not discussed. Or it can be addressed and dismissed early, when it can do limited damage.
Thanks to Engadget for the story.
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