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Mail Service Costs Netflix 20x More Than Streaming

Posted by samzenpus on from the costly-snail dept.

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."

3 of 473 comments (clear)

  1. Unfortunately by BrianRoach · · Score: 5, Insightful

    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.

  2. Volume Comparison by Alanbly · · Score: 5, Insightful

    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
  3. Re:Duh? by metrometro · · Score: 5, Insightful

    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.