Slashdot Mirror
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.
I tend to see that very popular movies (especially new releases) are not up for streaming.
You have to know that Netflix realizes they are saturating the internet, and perhaps they are doing us a favor by biting the bullet when it comes to paying a little more to ship... Maybe... I'd say they are one heck of a non conformist company if this is the case... But i'm going to say its pure laziness until I hear otherwise.
Some of us are stuck with "braodband" in the 1.5Mbps and movie streaming is
just not an option. May the telcom industry go stuff itself!
Dr. Frank J. Nagy Fermilab Computing Division Authentication and Directory Services Group
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
Content providers are at war with Netflix, and Netflix is differentiating Classes of Service depending on hardware used.
How I do I know? Same way you could know if you did the research. I have a Wii, a PS3 and Apple TV. Hook them up to a FastE hub, or a FastE switch that supports SPAN. Attach wireshark on a laptop.
Start the Netflix viewer on each device. Note that they each have different data centers that they reach out to. Always.
Traceroute to these IP addresses. Note that the Apple one in particular is congested at the last hop.
That is why the Netflix service sucks using the ATV2 unit.
So you have Netflix giving different hardware manufacturers different experiences - AND - you have bandwidth providers (mainly cable) trying to kill Netflix outright by rate shaping the traffic.
If I were Netflix, I wouldn't put those DVD burners on Ebay just yet...
...that so many "A" titles are unavailable for streaming from any source (not just Netflix). C'mon, people, it's the 21st century. Put everything up there; I'll gladly pay a buck or two to rent what I want, whenever I want; and I think most adults have the same attitude (not necessarily a lot of Slashdot readers, but anyway).
SHAW and ROGERS are pushing hard to penalize people for using services like Netflix with their new caps and $1-2 per gig for going over. CRTC+SHAW+ROGERS+BELL= Consumer shafting FTW!
by TheSpoom (715771) Uncaring Linux user here. I have nothing to add to this but please continue. *munches popcorn*
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.
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.
Does this figure reflect the $20million Comcast payoff?
they raised my plan! Arg! Damn them and there streaming media that has nowhere near enough titles!
If all you use is the streaming service, they lowered your plan :-D.
Of course it's cheaper. Netflix is just the latest to reap the benefits of cheaper delivery via digital means. Just as email is cheaper than snail-mail, spam is cheaper (unfortunately) to send than promotional mailers, Craigslist is cheaper to post on than putting flyers up in a neighborhood...it's even cheaper to use virtual tape drives for backup, and digitally replicate the backups over WAN links than it is to send tapes via UPS, overall. The examples of this seem endless, and there are many reasons why it happens that way.
For your security, this post has been encrypted with ROT-13, twice.
Streaming has a lot of downsides for me. Its really bad at fast-forward / rewind. It does not support subtitles. Extra DVD features are not present. So I like DVDs better. That said, they could get around some of these issues by caching the content at my house. If I put movies into my streaming queue, the content should begin downloading to my home right then, and not wait until I want to watch it. Sort of like a dvr with remote PUSH capability. Also if I an my neighbour add the same movie, then we should be able to help each others caching. And your netflix devices should just grab local cached data instead of streaming it from the internet. Doing it this way, the downloads could be done slowly, some could be done at night in off hours. And same-subnet boxes could scatter-gather the content to be even more efficient. The local cache would make the FF/RW perform much better. And extra features could be added as extra chapters that you can skip to.
Comcast has oversold your local drop or you need your lines fixed.
This is an interesting was of thinking about the real cost of Netflix, but this assumes that you purchased your broadband connection to do noting but watch movies. Personally I consider my broadband costs as separate, since I would pay for it anyway. Netflix probably reduces my overall household expenses since I no longer rent or buy many movies.
It's not just postage. You have to figure in the cost of handling as well. Picking the product. Packing the product. Unpacking the product. Shelving the product. Goto 10.
Apple TV uses a bad setting for DNS by default. See here for a description of the problem and solutions.
It's not Netflix's fault, surprisingly enough.
To a Lisp hacker, XML is S-expressions in drag.
The post office is only struggling financially because of government mismanagement and involvement. The reality is that people don't mail stuff much any more, and as a result, having reliable mail service 6 out of 7 days of the week is economically not viable. However, even though the USPS is not taxpayer-funded (it's self-funded), and run as a separate business, they still have to get permission from Congress to make any big changes for some stupid reason.
The USPS has proposed cutting regular service to 5 or 4 days of the week. Most people wouldn't care: do you REALLY need to get that junk mail 6 days a week? (This wouldn't affect Express service, of course.) However, stupid Congress won't let them do it.
Cutting delivery service on Wednesdays alone would save them a ton of money and probably put them back into the black. People who really want service all 6 days can go buy a PO Box.
At any rate, I think Netflix's move to online distribution is going to dry up pretty soon, and they'll be forced to go back to mail service, because the US-based ISPs are all going to require Netflix to pay huge fees to stream movies, or else have their service blocked. The FCC is complicit in media consolidation and is opposed to network neutrality, so this is what we're going to see in the US very soon. The ISPs (esp. cable companies) have their own (shitty) movies-on-demand services, and they don't like the competition from Netflix.
Streaming isn't available to some of us. If Netflix drops the mail service, about all we can do is drop Netflix.
I really wonder if there is enough bandwidth to support all the streaming services proposed. I'm forced to think that the limitations on the amount of downloads to some subscribers may be a taste of the future. Streaming video such as that Netflix is trying to use may be dead on arrival. Repeat, may. I'm only speculating.
Or the very large arrays some make to backup their BluRay collection.
Pfft. That's nothing compared to my Peta-byte storage array.
~$ df -h
Filesystem Size Used Avail Use% Mounted on
/dev/sda1 680G 5.8G 640G 1% /
/dev/md0 44P 13P 32P 29% /mnt/sys
It's a surprising disparity to me to, and the wiggle words "up to $1" are probably there for a reason. With mail delays, you can get basically 2 DVDs per week for each you are allowed home at once. For the two at a time plan, that would be $16 per month on shipping alone for a plan that costs $14.99 per month. It's possible netflix runs that way, since most customers probably aren't nearly that efficient. But I am that efficient, and you'd think they would have throttled me by now if I were an unprofitable customer.
It's is claimed between 1.8 and 3 GB per movie. Quite a bit less than DVD bitrate, but it's not 350 MB/hr like a lot of torrents used to be, either.
Subjectively, I think the visual quality of HD netflix streams easily surpasses DVD, evidently due to more efficient encoding. (Maybe I'm just not watching enough visually-frenzied action movies).
To watch it someplace that may not have a reliable connection?
Because you happen to like the bonuses that some DVDs contain that you can't get streaming?
Because you pay for your connection by the (mega/kilo)byte?
I'm sure there are plenty of other reasons to keep a local copy.
"I'm not sure I like the fugnutish tone you used in your post!" -RogL (608926)-
Well, hypothetically, if cable can convince FCC to allow switched service or whatever they call it (essentially one channel to your house, every chanel change alters what it displays), Netflix could become a cable subscription.
There are some issues (like cable killing personal DVRs in the process) that are preventing it, but it would actually free bandwidth for other uses, as each subscriber only require one HD channel of bandwidth per a TV for television, and when it's not on, it won't even be using that.
20mbps for each active user, netflix pipes through that too.
Of course I doubt they will all get along, just pointing out there is potential for this to work. Especially if Netflix becomes a selling point for cable (I certainly like it more than on demand, and wouldn't mind it not going over my network).
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
But then that's amortized out over millions of subscribers. The envelopes take manual intervention. someone to open and dump the disk. hourly employee +benefits. Servers, on 24 hours a day, no bennies....in the long run the servers are the better investment.
"Hmm. I am to metaphor cheese as metaphor cheese is to transitive verb crackers!"
Because of the government's make-believe zero inflation, the post office has had to keep rates the same for 2 years while UPS and Fedex increased their rates by 10%. With 170 billion pieces of mail delivered, USPS can increase revenue by billions by raising rates by a couple of cents: its financial problems are greatly exaggerated.
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.
No, delivering to everyone in the country is a sensible requirement, as set out when the USPS was first created long ago.
However, being required to do it 6/7 days is not. I don't think that was even required back then.
The problem is the Congress is too involved in minor details of how the USPS operates itself. It's supposed to be an autonomous, government-owned nonprofit company. It's not supposed to be micromanaged by politicians for political purposes (some of whom probably want to give it impossible requirements so that it will fail and then they can say that government shouldn't be involved in mail service). That's why it's having trouble.
A certain subset of people, myself included, would drop Netflix if they eliminated dvds / blu-ray. They may not see a revenue increase in response to such a move (at least, not in the short term).
"However, being required to do it 6/7 days is not. I don't think that was even required back then."
If 6/7 days is too much for you did you know they used to deliver three or four times a day in some major cities?
Netflix HD is 720p or 1080p VC-1, running at a maximum bitrate of 6Mbps. While comparable in bitrate and better in quality than a DVD, it's still lesser quality than broadcast HD MPEG2 (from a station with good encoders), and far lesser than is available from Bluray.
And when people sent everything through the mail system, that was supportable. That sort of rapid package service still available through small messenger services in the cities, but in order to make it a viable business, their prices are considerably higher than the Post Office ever charged.
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...
Build it, Drive it, Improve it! Hybridz.org
probably has something to do with their packaging, and pre-route barcodes on the envelopes...
Michael J. Ryan - tracker1.info
There are a couple of different types of digital tv delivery on cable. None of them actually get a whole tv channels' bandwidth the way analog tv did. Regular network and station shows don't require additional bandwidth as more people watch. They're not using separate stream or frequencies for each viewer. They do have control over the bandwidth (in the bitrate sense) that each program gets, with HD needing more. Less viewed channels may be delivered at a lower quality level (lower bitrate = higher compression) to make more available for other things. Because there are so many channels, the quality level is significantly worse than the quality transmitted over the air by digital stations. Even with more efficient MPEG4 or h.264 compression, quality is lower than over the air (MPEG2) due to the bitrates. Also, they often don't carry all of the programs that a station has on a broadcast transmitter (for example check and see what your local public or PBS stations broadcast by looking at the station websites, then compare guide listings for cable)
Those shopping channels aren't taking "free" space/channels, their eating precious bandwidth everything else.
Some bandwidth is used for on-demand and internet services. Those things DO take bandwidth for each user and as a result the traffic for those isn't system wide. The system is essentially divided up into fiber-fed subnets with the number of coax-connected people in each limited based on available bandwidth. If you experience localized slowdowns they've oversold the capacity of those local nodes.
So if you're thinking you save bandwidth when you're watching normal or subscription cable channels, you don't. It's only your net use (including streamed video from any net source, and those paid on-demand (starts when YOU want it, not pay per view fights etc) programs that take additional system bandwidth beyond their standard tv services.
Consumer protests sometime do result in changes in regulation. But there's a downside to that. Now cities can do little to force better service since it's federally regulated. Also, the "fairer" system for rates that the feds came up with is based on channel count. Those junk shopping channels count. The cable operators get kickbacks based on sales. Most operators all insert and sell advertising. That hurts revenue of local radio and tv stations, in some cases degrading the service those provide. They face much higher costs. Consumer should demand that the FCC not allow cable operators to charge for channels that they get ad or kickback revenue to carry.
Cable has harmed broadcast in other ways. In some smaller markets where more people use cable due to fewer local available signals (at least in the past), many stations skimped on the digital tv conversion. Some opted for lower power transmitters hurting coverage. Some also didn't put digital back on the original analog channel at the end of the transition (which required moving and perhaps new equipment TWICE). As a result a number of small market stations gave up VHF channels and ended up on UHF. In some of those cases, particularly where terrain is rough, many viewer lost reception entirely). Some could theoretically get it with high gain outdoor antennas and preamps but there are a number of regions where even that doesn't work. I've seen stations that only identify by their cab;e channel number, as if no one was watching the actual transmitter. It's a shame, because with digital tv service a small number of stations could actually carry a number of programs.
NetFlix is competing with cable for revenue. Except for some channels with a per-subscriber license fee, your not using or even not subscribing to any already on for others television services doesn't measurably reduce any bandwidth costs or ease bandwidth limitiations they face. Using their net services or using them more raises their costs (but not nearly as much as what you pay them).
this assumes that you purchased your broadband connection to do noting but watch movies.
Or that you're stuck out in cap-ville and have to buy your Internet access in 5 GB/mo units. Satellite and 3G are like this.