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Netflix Announces Opening of 10 Regional Distribution Centers

Jun 20, 2002
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 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

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.

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