

Netflix: Streaming vs. DVD margins - nikhilpandit
http://techcrunch.com/2012/01/25/netflixs-streaming-dvd-margins/

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darkane
The reasons for this are obvious, and probably have nothing to do with the
cost, difficulty, or politics of streaming. It's more likely due to the
majority of their by-mail customers routinely going inactive for months at a
time, while still paying for the service.

That inactivity is so well known that it became a talking point in social
commentary and has even been the punchline of late night jokes.

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Roboprog
Ouch. That's exactly what happens to us: 2 disks, that we wait a month to
remember to send back.

The article does point out the "for now" aspect, though. "f(x) = DVD profits"
is large, but with a negative derivative, while "g(x) = Streaming profits" is
smaller, but with a positive (first order, at this point?) derivative.

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adamfeldman
Did anyone even proofread this article? "....(adding 220 subscribers
domestically in the quarter)....", "The streaming business also twice as many
subscribers....."

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mikeklaas
It's TechCrunch.

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PaulMest
I'm guessing Netflix is highlighting this to negotiate better prices for their
content while also signaling to the market this isn't a business others should
enter.

I get the sense that Netflix is splitting up these numbers to help their
content partners realize that they are killing a potential golden goose.
Nobody has been as successful as Netflix with streaming legally licensed
content... and from reading other articles, content partners kept raising
their rates substantially as Netflix was growing. With this move, it's clear
that the established DVD business-model has strong margins and the online
business could be drastically hurt if content partners raise their rates any
higher.

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Lagged2Death
The old DVD-by-mail model was hugely profitable, so they decided to confuse
everyone by re-branding it? What?

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MicahWedemeyer
Funny that this posted the same time as Backblaze declaring DVD to be dead.

[http://blog.backblaze.com/2012/01/25/the-dvd-is-dead-usb-
fla...](http://blog.backblaze.com/2012/01/25/the-dvd-is-dead-usb-flash-drive-
restores-are-here/)

~~~
Terretta
Not so funny if you consider what people are paying for.

Subscribers aren't paying for DVDs. They're paying to have an instant on movie
that works offline. They're paying for the experience.

Same for BackBlaze. You don't want a DVD data experience, why would you?

