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Mail Service Costs Netflix 20x More Than Streaming
Jake writes "Netflix currently pays up to $1 per DVD mailed round trip, and the company mails about 2 million DVDs per day. By comparison, the company pays 5 cents to stream the same movie. In other words, the company pays 20 times more in postage per movie than it does in bandwidth. Doing some simple math, Netflix is spending some $700 million per year in physical disk postage. Rising content prices are offset by declining postage fees for the company, as more and more users choose the streaming-only option. Furthermore, subscriber revenues will continue to increase as Netflix increases the size of its streaming library."
I don't want to watch old movies or flops all the time.
Their streaming selection is ok for TV shows, but for movies it's fairly poor. This is no doubt directly due to the MPAA restricting what they can stream.
This article seems to be missing something important. How much does Netflix pay to the content provider for a license per movie played? Last I saw, estimates for most big players were something like $.50 to $.80 per view. For DVD's Netflix has to maintain a huge network of warehouses, staff, and buy replacements for what is broken, and the shipping, but in many cases that still seems to be cheaper than getting a license to stream the same film.
Yes, on a per-movie basis streaming is far cheaper but what's the difference in movies streamed per account versus movies rented via mail. I'd wager the average Netflix customer who doesn't stream consumes far fewer movies per month than the average streaming customer.
-- Adam McCormick
pay for improvements to the backbone.
Linux distros and other filesharing will disappear by comparison.
This is the service that pays for the next internet upgrade.
I know I've gone from 28kbps up / 380kpbs down to 120kpbs (sometimes 180kpbs) up / 800kpbs down on comcast in houston.
The capacity is there.
I regret not getting Netflix sooner but they seem to have exploded recently-- at least 20 new series and a hundred new movies seem to be added weekly. I'm now 450 hours behind on viewing and I haven't even added Lost yet.
This is the "cable TV" killer. Cable TV will have to lower rates from $10 a month.
And Columbo from the 1980's is just as entertaining. Watched a great Danny Kaye film last night.
There is a huge oversupply of entertainment-- it's time for the prices to start coming down!
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
Since it uses 2 or so GB per HD movie streamed, your comcast caps will be pushed. The USPS hasn't called me up saying I have used too much mail.
I believe they would stream the latest if they could get the rights to stream it.
You are entitled to your own opinions, not your own facts.
Yes, next they should drop that silly government-knows-better requirement of shipping to everyone, everywhere. All those rural farmers cost us far too much. To further increase profits, they should be allowed to discriminate the material you mail. I'm sure there's more money in NOT shipping the ACLU's mail than in shipping it, if you ask the right people. Then, finally, the market will be free and everyone should be better off.
Fleur de Sel
Yeah, it turns out that the founders of the country had rather peculiar ideas about mail. They thought the easy and reliable access to periodicals (ie, information) was essential to the continuation of democracy in America. Their was a raging debate early on between the pragmatists, who felt that newspapers should get deeply discounted mailing rates, and the idealists, who argued that newspapers should be able to use the US mail service for free.
They also argued that mail service should go to everyone, not just urbanites, for much the same reasons. Those inconvenient postal rules are a legacy of this passionate advocacy for free information.
This is all mostly forgotten today, but I wish it wasn't. The illustrative points about the utility of free exchange of information in a democracy. The illustrative lessons for last-mile broadband and an open Internet are so obvious I don't have to mention them.
If you ever want to hear a beautiful example of an employer and a union doing their best to screw each other over, listen to a post office employee for a while. Horribly management of the things they can change combined with union opposition to any change that could be more efficient (and therefore mean less workers).
The big question mark in reducing deliveries is whether it bumps the weekly workload for mailmen below 40 hours a week, at which point it becomes a very different kind of job.
If Comcast has its way, the Internet will be pay-television.
You are welcome on my lawn.
They drop physical media, I drop Netflix and rely more on RedBox. I LIKE 1080P video, full 7.1 surround sound, and all of the other goodness I get from the physical media. I'm sorry it costs them more but this is what their business was founded on and while they make MORE profit from streaming they still make profit on me too. I even try to help them out by sending back disks in pairs to cut down on costs. They need to remember their core business...
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