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Netflix says shipping back to normal

Online DVD rental pioneer Netflix Inc resumed normal shipping on Friday after the most severe outage in the company's decade of operations, a spokesman said.
/ Source: Reuters

Online DVD rental pioneer Netflix resumed normal shipping on Friday after the most severe outage in the company's decade of operations, a spokesman said.

"With possible rare exceptions we will get everything out today," said spokesman Steve Swasey.

Netflix said all customers whose shipments were delayed will get a 15 percent credit to their next billing statement. New customers using the service on a free trial basis will have their trial extended by a week.

"We don't have in our terms of agreement that if you miss a day you get a credit," Swasey said. "We just do that voluntarily because it's the right thing to do."

Netflix did not disclose what caused the outage, which affected about a third of its 8.4 million customers.

The disruption prevented Netflix from mailing out any DVDs on Tuesday, but the company did have partial deliveries on Wednesday and on Thursday.

This week's disruption was only the second delivery outage for Netflix since the company started mailing out DVDs in 1999, Swasey said. The company had a one-day delivery meltdown in March, he said.

Red mailers with the Netflix name have become ubiquitous for many Americans who select films on the Internet and then get DVDs in the mail, usually a day or two later. Advertisements litter the Web with trial offers.

Swasey said the disruption was not affecting the company's Watch Instantly Web streaming service, which it offers free to subscribers.

Cary Miller, a media executive and avid Netflix user who receives four or more discs in an average week, said he was not bothered by the disruption problem.

"Netflix's service has been impeccable," said Miller. "I probably wouldn't have noticed if they hadn't informed me."

Netflix sent e-mails to people who were due to receive discs and were unable to get them and said it would be issuing a credit to those accounts in the next few days.

The March outage was caused by an entirely different problem, which the company has since resolved, Swasey said, without giving details.

In the previous outage, Netflix resumed shipping DVDs one day after a technological breakdown knocked out its site, and it offered 5 percent discounts on bills to members who did not receive DVDs on time.

The company has put significant pressure on DVD rental king Blockbuster Inc., but it also faces challenges from online video providers like Apple Inc., and Amazon.com Inc.

Late last month, Netflix posted a better-than-expected second-quarter profit and raised its 2008 forecast, easing analysts' concerns about higher costs related to its move to spend more for Web-delivered content as it expands its streamed content service..