IP Communications

For those that rely on Netflix to rapidly ship the next title in their “Queue”, they may have to wait just a little bit longer. The company that has gotten its customers spoiled with fast turnaround of movie and other DVD distributions announced that it has experienced the most severe system outage in its history today.

Reuters (News - Alert) reported this outage earlier this afternoon, saying that the system failure has prevented the shipment of discs to roughly one third of Netflix’s 8.4 million customers. Just how bad is it? No DVDs were shipped out on Tuesday or Wednesday and so far, none today.

According to Steve Swasey, Netflix spokesman for the Los Gatos, California-based company, Netflix will be providing credits to affected customers and the company is feverishly working to determine the cause of the outage and to fix the problem.

While the thriving company showed strong stock market performance, turning in $31.46 per share in the early afternoon, it quickly fell once news of the shipping problems came to light.

Swasey noted that this is only the second time in the company’s history that it has been unable to ship DVDs due to a technical glitch. He added that this outage is worse than the one in March, which was caused by a completely difference problem, that has since been resolved.

The problem in March prohibited DVD shipping on March 25, one day after a technical breakdown knocked out its site for much of the prior day. The company offered a 5 percent discount on bills to members who did not receive DVDs due to that outage.

"This time, the site's been up but our shipping system is down. It's worse than it was in March. We're really backlogged," Swasey said in the Reuters report.

Netflix did send e-mails to people who were due to receive discs and were unable to get them. This proactive approach to customer service will help to keep certain frustrations at bay, but for those that are accustomed to receiving their next shipment within days this outage may be enough for them to consider a competitive alternative.

For Netflix, how they handle this outage and its subsequent repair will go a long way towards protecting the customer base or driving higher customer churn. While the company is scrambling to fix the glitch, they must also practice adequate damage control.