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Netflix resumes shipments following outage

16 August 2008 3:00 by James "Dela" Delahunty | 8 comments

Online DVD Rental service Netflix resumed normal shipping activities on Friday following a three-day disruption. Netflix has been in operation for over a decade, and this has been the worst incident it has run into so far, and only second overall after experiencing delivery problems in March earlier this year. The company's earnings are not expected to take too much of a hit from the incident, but some analysts warned that problems such as this always impact a company's reputation.

New users who were on a two-week trial when the problems occurred will have their trail extended by a week, while customers who have been affected by delays will receive a 15% credit to their next billing statement. "We don't have in our terms of agreement that if you miss a day you get a credit," said Netflix spokesman Steve Swasey. "We just do that voluntarily because it's the right thing to do."

Backlogged shipments were expected to get moving on Friday, with the possibility of rare exceptions. The outage hit about one-third of the company's 8.4 million customers, but Netflix will not provide any specific details on what actuall caused it, nor the total expected cost of the refunds and trial extensions.

The company was prevented from mailing out DVDs on Tuesday but did manage partial deliveries on Wednesday and Thursday. The disruption could cost Netflix one or two cents in earnings per share for this financial quarter, or up to about $2 million in profit, according to Andy Hargreaves, an analyst with Pacific Crest Securities.

Permalink to this article | Topic: Online video

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Discuss this article!
1bonehead (Senior Member) 16 August 2008 3:14
*Quote:* *"We don't have in our terms of agreement that if you miss a day you get a credit," said Netflix spokesman Steve Swasey. "We just do that voluntarily because it's the right thing to do."* Now that is smart damage control !! [ + quote]
lxfactor (Senior Member) 16 August 2008 10:20
we can screw you over.. we are just pointing that out.. but nah we'll let it slide this time [ + quote]
joerosen (Newbie) 16 August 2008 13:07
Running the systems for DVD rentals is complex and NFLX is solid! I know, I run the software for SugarDVD.com, the largest rental by mail for Adult DVDs online. Hats off to NFLX for addressing this publically and quickly. Anyone who gets upset at their delay can drive to the video store or use video-on-demand! [ + quote]
mspurloc (Member) 16 August 2008 14:52
Agreed. There is no question Netflix has the best mindset for customer service in the industry. They've learned the "Tylenol Lesson" well and were up-front about this. I'm still dying to know what actually happened. Had to be some kind of security breach, even if only a virus or disgruntled employee. [ + quote]
7thsinger (AfterDawn Addict) 16 August 2008 16:36
It's nice to see them responding to this incident in what appears to be a customer friendly nature. [ + quote]
veemann (Newbie) 16 August 2008 19:03
Probably that damn UPS virus going around. V [ + quote]
dp70 (Newbie) 16 August 2008 21:39
Actually, Netflix had started two weeks earlier, doing things such as saying they got dvd back on a wednesday, that were returned at the main USPO on the Saturday morning. Very slow and I just do not believe other fishing expeditions were not underway. My netflix is 35 miles away. If NF wanted to be up-front about problems, they could have posted this on their start page, I can imagine enough people ranted and as I did treminated my account. Try reading their terms, you the user have the right to like whatever they wish. [ + quote]
duke8888 (Junior Member) 17 August 2008 16:51
Netflix crash was cause by them getting ready for next month processing. Next month Netflix has to give a free month to the thousands who were part of the Class action suit they lost in court. So 15% of 0 is 0 for those who get 3 dvd's at a time. Netflix is a bunch of crooks...... They suck [ + quote]