Netflix opens doors in Butte

By Holly Michels, of The Montana Standard - 10/04/2007

Joe Warren, 33, and his sister, Crystal, 21, stuff DVDs into Netflix envelopes at the company’s warehouse facility in Butte earlier this week. The distribution hub sends out between 6,000 to 10,000 DVDs a day. Lisa Kunkel / The Montana Standard.

Apparently magic elves don’t bring Netflix movies overnight to the mailboxes of thousands of Montanans.

Those little red mailers, full of popular titles like “Pirates of the Caribbean” and “Casino Royale,” are now shipped out of Butte, after a small distribution hub of the DVD giant opened in the Mining City — five weeks ago.

Didn’t notice? That’s no surprise, since all that marks the building, a neutral- colored steel structure in the warehouse district off Iron Street, is a white and black sign with the address, three numbers Netflix won’t disclose to the public.

The under-the-radar location and a tight-lipped approach to talking about distribution technology are all part of the company’s corporate secrecy, part of what Steve Swasey, director of Netflix corporate communications, said makes it the largest DVD renter in the nation.

Swasey prepares visitors to the hub for less than they’re expecting.

“Prepare to be underwhelmed,” he said, opening a non-descript door to the bland-looking facility.

Inside the building, there’s not a whir of machines or shelves and stacks of movies. And there’s just six employees, listening to MP3 players and sitting in ergonomic chairs, ripping open thousands and thousands of DVDs delivered that morning by the U.S. Postal Service.

“They literally spent the morning ripping the mailers open,” Swasey said. “It takes about three, three and a half hours.” Workers in Butte average 750 movies an hour each, but the company’s super-human speed record is 1,145.

“Once they’ve been doing this a couple months they’ll get faster and faster,” Swasey said.

It’s important to tear open all those DVDs at lightning speed, since most titles are on their way back out again, to almost 90 percent of Netflix’s subscribers in Montana.

All 10,000 DVDs the hub sends out Tuesday will end up in mailboxes and DVD players across the state by Wednesday. No more waiting two days for new movies, Montanans can now get new flicks in 24 hours.

“Folks in Montana deserve the same next-day delivery as San Francisco (or) New York,” Swasey said.

The hub is busiest Tuesday, since people watch DVDs on the weekend and send them back Monday, Swasey said.

Other weekdays workers process about 6,000 movies.

It’s surprising how much of the grunt work is still done by hand. But that personal touch, Swasey said, is why your copy of “Sting’s Greatest Hits” is returned when you meant to send back “The Sting.” Workers also get notes from viewers saying things like “I hate this movie, wish I didn’t rent it,” and the occasional “personal” film. Those, Swasey said, get returned, most of the time before the sender knows it’s missing. Damaged labels — “people use them as coasters” — are replaced and mismatched titles find their correct home.

By 10 a.m., all the DVDs are sorted into top-secret color coded boxes and workers take an “ergonomic stretch break,” doing calisthenics to prevent carpal tunnel syndrome. The DVDs head off to Netflix’s most prized proprietary secret, a machine that whirs movies around with incredible speed, but what it does to them, Swasey can’t say.

“All I can tell you is it sorts them by zip code,” he said. “That’s about it.” Most of the warehouse in Butte is open floor space, since Netflix doesn’t store any DVDs at the facility, only sending out what comes in. If a viewer desperately needs a copy of “Them,” a 1950’s horror movie about atomic killer ants in New Mexico, it gets ordered from the nearest facility that has it or the 42 million disc storage center in California.

The building is grossly oversized to allow for growth, Swasey said.

“Netflix leases real estate for expansion,” he said. “This building was the right value, the right opportunity, the right location.” And growth is something Netflix can expect.

Swasey said membership has grown in every state in which the company opened a hub, mostly because of next-day deliveries.

“There’s always DVDs to take out of envelopes and DVDs to put back in envelopes,” he said.

Reporter Holly Michels may be reached via e-mail at holly.michels@lee.net.