Netflixed: The Epic Battle for America's Eyeballs

by Gina Keating

Dillon calculated that it took at least fifteen thousand Netflix customers to support a single distribution center. He developed a “satellite hub” system to achieve faster delivery outside the one-day delivery zones in which trucks delivered outbound DVDs from distribution centers to remote post offices that hand carried them to customers’ homes the next day. The beauty of Dillon’s program was that it continually evaluated and adjusted the optimum locations for distribution centers as Netflix’s customer base grew and changed. The program meticulously tracked postal carriers’ daily rounds by asking customers to disclose when they mailed and received Netflix mailers, leading to a close collaboration between Netflix and the postal service. Dillon first shared his data with postal inspectors in hopes of improving delivery times and tracking occasional bubbles of DVD theft. The relationship later extended to helping postal inspectors nab mail thieves intent on skimming gift cards and checks. As efficient as the distribution system was, the intensive programming demands that attended its rapid growth led to the occasional glitch: Dillon once accidentally ordered the system to deliver every disk in customers’ queues simultaneously. Some delighted subscribers received as many as three hundred disks in a space of a few days.