Netflix Announces Opening of 10 Regional Distribution Centers
LOS GATOS, Calif., June 20 /PRNewswire-FirstCall/ --
Netflix, the World's largest online DVD rental service, today
announced that it has opened 10 regional distribution centers throughout the
U.S. to provide faster service to its more than 600,000 subscribers. The new
facilities, which supplement the company's main distribution facility in
San Jose, CA, are located in the Atlanta, Boston, Denver, Detroit, Houston,
Los Angeles, Minneapolis, New York, Seattle and Washington, DC, metropolitan
areas.
Netflix, which launched its DVD subscription service just over three years
ago, allows movie fans to rent as many DVDs as they want for $20 a month, with
up to three movies out at a time. Subscribers simply create a list of movies
they want to see at www.netflix.com and the DVDs are delivered and returned
via U.S. Postal Service in postage-paid mailers. Customers can keep the
movies as long as they like -- there are no due dates or late fees. As each
movie is returned, Netflix automatically mails the next available title on the
subscriber's list.
Strategically located, the 10 regional distribution centers affect shorter
delivery times to nearly 90% of the U.S. population. The company hopes that
by opening the new facilities it will replicate regionally the success the
company has experienced on the West Coast where most of its customers enjoy
one- and two-day service. In the San Francisco Bay Area, where the company's
first distribution facility was opened, approximately 3.1 percent of
households were Netflix subscribers as of June 2002. This compares to
approximately .6 percent of households nationally.
"We are continually seeking new ways to improve the Netflix customer
experience, and our ability to make sure that our customers get the movies
they want to see, when they want to see them, is paramount to our success,"
said Reed Hastings, Netflix CEO and co-founder. "With the addition of the
10 regional distribution facilities, we believe that we have significantly
improved our ability to service our current customer base, while giving other
consumers who enjoy renting movies, but haven't tried renting over the
Internet, a new reason to try Netflix."
The company opened its first two regional facilities in Los Angeles and
Boston in late January and based on the success of those facilities proceeded
to open the additional eight other facilities over the past five months. All
of the facilities are now fully operational. The company believes that each
facility can handle approximately 50,000 DVD orders per day. Combined with
the main facility in San Jose, Netflix believes it has the capacity to handle
up to a million orders a day.
"While customer satisfaction with Netflix has been relatively the same
throughout the country, mainly because consumers love the idea of a
subscription rental service, we have found that our customers on the West
Coast are more likely to promote the service to their friends and family
because of the faster service," said Hastings. "Now that the majority of our
customers are getting their DVDs more quickly, we believe the faster service
will have a positive impact on our continued success."
About Netflix
Launched in 1998, Netflix is the world's largest online DVD rental
service, with more than 600,000 subscribers and a comprehensive library of
over 11,500 titles. For $19.95 a month, Netflix subscribers can rent as many
DVDs as they want, with up to three DVDs out at a time, and keep the movies
for as long as they like. There are no due dates and no late fees. DVDs are
delivered directly to the subscriber's address by first-class mail. Based in
Los Gatos, California, the company also provides background information on DVD
releases, including reviews, member reviews and ratings, and personalized
movie recommendations. For more information on the company, visit
www.netflix.com.
Forward-Looking Statements
This press release contains certain forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A
of the Securities Act of 1933, including statements relating to the likelihood
that the company's subscriber rates in the San Francisco Bay Area will be
replicated across the country as a result of regional distribution centers,
that the new regional distribution centers will significantly improve our
ability to provide better service to our customers the company beliefs
regarding facility capacity and the impact of regional distribution centers on
the overall success of the company.
These forward-looking statements involve certain risks and uncertainties
that could cause actual results to differ, including, risks related to our
ability to attract and retain subscribers, the risk that the San Francisco Bay
area is not indicative of likely behavior in the rest of the country, our
ability to manage our growth, impacts to our operating margins, operating
constraints or difficulties and such other risks as identified in our
Prospectus dated May 22, 2002, and filed with the Securities and Exchange
Commission.
NOTE: Netflix is a registered trademark of Netflix, Inc.