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Re-design netflix’s envelope, or else

December 7, 2007

Netflix has been hailed as one of the most innovative business ideas in recent history.

Much of its success has been down to the brilliant design of its envelope, a very simple, but important element that allows the business to function.

It now appears this envelope has been adding costs the United States Postal Service that it can no longer tolerate.

According to Engadget.

“Apparently, those buggers have cost the US Postal Service a staggering $41.9 million in additional labor costs over the past two years due to their “nonmachinable nature,” and if things aren’t changed, it could cost ‘em another $61.5 million over the next couple years. In a letter from the Inspector General’s office, Netflix is being, um, asked to rework its mailers or face a $0.17 surcharge per envelope, and if such a fee was tacked on, it would reportedly decrease the outfit’s monthly operating income per paying subscriber by a whopping 67-percent. Not surprisingly, it sounds as if Netflix will bite the bullet and redesign the problematic mailer if the USPS is serious about the charges, so feel free to keep an eye out for a design change in the not-too-distant future.”

Given that Netlfix offered a $1 million prize to anyone who could improve their recommendation algorithm, it’s possible we could be about to see Netflix launch a design competition for its new envelope. That 67% decrease in operating income means the prize money is likely to look rather good.

Stay tuned.

Posted by Ed Cotton

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