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Question and answer with Netflix's Steve Swasey

Tuesday, September 11, 2007 | 8:33 p.m. CDT; updated 2:11 a.m. CDT, Tuesday, July 22, 2008

On Aug. 1 online movie retailer Netflix opened its newest distribution center in north Columbia. The following are excerpts from a telephone conversation with Steve Swasey, Netflix’s director of communications.

Q: Why is Netflix in Columbia?

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A: Well, because the folks halfway between St. Louis and Kansas City deserve to get next-day delivery. We have a 50-mile radius to get next-day delivery, and Columbia didn’t fit that.

Q: Why open more physical facilities when the future is online downloads?

A: It’s part of our growth strategy. Right now we’re in the opening minutes of the second act of a three-act play. The second act is the hybrid act where people are renting DVDs (at the store) and getting movies online. Online is new and cool and fun, but it’s not pervasive. It will not be pervasive for a while. The third act (where it’s all online) is a long ways away.

Q: Who does Netflix compete with?

A: The biggest competition is people who don’t have time to watch movies. (And) there’s still a lot of folks who go to the video store.

Q: What’s the future of the home video rental market?

A: The big chains are in trouble because of the move online. Eighty percent of their focus is on new releases, so as far as selection goes, you’re not getting a good quality experience.

Q: Netflix has a history of being secretive about the locations of their shipping facilities. Why?

A: We are trying to discourage people from stopping by. We don’t want people to try returning movies (directly to a shipping facility). It would disrupt operations. And, plus, it’s a security issue.

Q: What can you tell us about your Columbia facility?

A: You’d be underwhelmed by the size of the place. It’s about 2,500 square feet, which is the size of a small house. There aren’t any huge racks of DVDs. There are only 10 employees. On a typical day in Columbia you’ll be sending out between four and five thousand DVDs.

Q: How do all of the little red envelopes end up in the right mailbox at the right time?

A: It’s amazing software and amazing attention to detail. It’s all done on the backs of brilliantly designed software.

Q: If I’m Janet Marsh, co-owner of local Ninth Street Video, should I be worried Netflix is in town?

A: It all depends on how she serves her customers. If Janet has excellent personal service and loyal subcribers and reasonable rates, she’ll have a business. Some people still want to go to the video store.


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