I believe it's more complicated than that — probably transactions that happened *after* the upgrade that they now need to reconcile manually.

The theory would explain why Netflix seemed to know it received DVD returns from particular customers, but can't figure out what next from the queue to ship. (Photo by AP/Marcio Jose Sanchez)

We're Sorry DVD Shipments Are Delayed

Dear [Netflix customer],

Our shipping system is unexpectedly down. We received a DVD back from you and should have shipped you a DVD, but we likely have not. Our goal is to ship DVDs as soon as possible, and we will keep you posted on the status of your DVD shipments.

We are sorry for any inconvenience this has caused. If your DVD shipment is delayed, we will be issuing a credit to your account in the next few days. You don't need to do anything. The credit will be automatically applied to your next billing statement.

Again, we apologize for the delay and thank you for your understanding. If you need further assistance, please call us at 1-888-638-3549.

-The Netflix Team

(Photo by Seth Anderson)

• Internet service providers: Comcast is a cable provider and AT&T has its U-Verse and HomeZone IPTV offerings, and both companies have their own set-top boxes and on-demand movie and television offerings. Plus the two generally compete only against each other in many markets. Which means neither has much of an incentive to increase speeds to those that could provide the Roku box with the HDTV signal it reportedly supports. Comcast has shown that it will throttle bandwidth for specific applications, and then lie about it to the FCC.
• Movie studios: I've used the Netflix feature to watch movies online and the selection isn't particularly impressive. Reports peg available titles at 10,000, with a handful of television shows thrown in. Netflix will have to go over the heads of the DVD distributors it has relationships with directly to the studios if it wants current content.
• Surly adopters: Fool me once with Akimbo, the Apple TV, or Unbox over TiVo, shame on you. Fool me twice with the Roku? Shame on you. The gadgetophile market is probably wary of cluttering their home theaters with yet another clunker. The key will be to get the chipset Roku has developed for the box built into new TVs. Only then can Netflix count on the kind of mainstream audience that will convince the studios and the ISPs that the project can't be ignored.

Six Apart's offices seem pretty ordinary to me. Their meeting space is *tiny*. Googleplex's niceties are all about enticing their workers to stay at work longer — yeah, that's real HAWT!. Valleywag offices look like a dump to me.

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• Tech's top 10 workspaces
• Tocquigny
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Formerly, Netflix customers were limited to one hour of viewing per dollar they paid in monthly subscriptions. They now have access to 6,000 movie and TV titles online, with unlimited viewing. (By contrast, Netflix has 90,000 titles on DVD.) Unlimited, that is, except for those folks paying $4.99 a month to rent two DVDs at a time. But those cheap bastards get what they deserve.

But what Bookrenter will learn the hard way is that a business model that works well for movies and videogames won't necessarily work well for textbooks. We asked an actual college student why, and the answers were instructive. Leave aside the sheer weight of textbooks, which drives up shipping costs. The main problem is that many textbooks are updated annually. For example, the University of Caifornia at Davis has 2,000 students taking chemistry. The required textbook costs $200, and a new edition is published, and required by teachers, every year. On top of that, the text is required over three consecutive quarters. The cost difference between a purchase and a year-long rental would be negligible. Bookrenter will wind up with a bunch of textbooks which can't be re-rented. Most importantly, students wouldn't be able to doodle in the margins.

Services like iTunes, working with the Apple TV set-top box, and Xbox 360's Marketplace, offer a limited but growing library of TV shows and movies. Netflix, the DVD rent-by-mail service, is hiring hardware engineers. Amazon, currently a TiVo partner, is rumored to be working on a media-playing device of its own. And more networks are beefing up Web-enabled viewing like ABC's HD-like experience and ESPN 360. To top it off, there's the enigma that is Vudu, a set-top box that's built to replicate Netflix's level of service by offering a host of first-run, DVD-quality movies.

What TiVo has going for it is its ability to record live broadcasts, much of which never turns up on DVD or online video libraries. It also has mainstream appeal compared to Web-video downloads or multitasking game consoles and personal computers. But increasingly, it's going to be hard to convince consumers to buy a separate gadget and make room for it in their living room, when the devices they already have — PCs, game consoles, and even portable media players — can provide the same basic service of delivering video.

Microsoft, in particular, is trying to market the Xbox as a set-top box replacement, especially for phone companies trying to deliver video over Internet connections, a technology known as IPTV. That, more than anything, is what's likely spurring Sony's DVR move — and with Sony, Apple, and Microsoft sparring over the living room, there's going to be little room left for TiVo.

This ( below) was sent out on Friday to all employees. Bill Henderson has been in the job for all of one year, since he was already retired from the post office when netflix came calling last year it is a bit odd that after only one year he now is a "strategic advisor"... at least it wasn't special projects!! When you add that the BOD (SEC filings) just gave raises to Barry McCarthy, Reed Hastings and Leslie Kilgore and NOT Bill Henderson it's pretty obvious what happened here. He was only a hire to liason with the Post Office as the real operations work was done already and he had absolutely nothing to do except make sure the post office didn't try and screw netflix ...

Hi.

I've asked Bill Henderson to switch to become a part-time Strategic Advisor to me, and I've asked Andy Rendich to become interim head of operations. Both have accepted.

I"ll be starting a search for a new permanent head of operations. Typically it takes 4-6 months.

No doubt this is a surprise to you. We're on a great course, and Andy knows our operations inside out. I think he'll do an excellent job.

This is not confidential.

- Reed

• Is it that big a deal that Netflix offered a million-dollar bounty for anyone who improves its movie recommendation engine by 10%? Wait, how do you even measure the accuracy of movie recommendations? Who cares, the media's eating it up as if they get a finder's fee. (If you win this contest after reading it on Valleywag, you do owe us a finder's fee: a lifetime subscription to "Netflix: Porn Edition." [NY Times]
• Rocketboom video blog founder Andrew Baron (pictured) sells another week of ads for $80,000, says he sells $4,000 a month in t-shirts alone, then does some classic "If only we got a fraction..." math to justify a possible subscription model. A fine business model, but didn't Drew spend the last year decrying "Old Media?" Ads and pay-per-view are as old as Cable TV. [MarketWatch]
• Aw, nobody likes PayPerPost, a service so mercenary that even blog network exec Jason Calacanis called it "stupid and evil." BusinessWeek calls the company "unrepentant" when it announces that the company (which pays bloggers to write about products and services) just took a $3 million venture capital investment. The bright side: There's no way this company will earn enough to satisfy its investors, so at least it'll get as screwed as the bloggers whose reputations it ruins. [BusinessWeek]