Mail Service Costs Netflix 20x More Than Streaming 473
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."
Unfortunately (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.
Margins (Score:5, Insightful)
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.
And some of us marginalized (Score:3, Insightful)
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!
Volume Comparison (Score:5, Insightful)
Re:Unfortunately (Score:5, Insightful)
Totally. I'd be happy paying another 10bucks on what I currently pay to be able to stream something released in the last 15 years.
Caught up on my early 80's Zombie flicks, just want more recent (well, better!) films... Big film companies need to make this work as an awesome service before everyone heads back to Bittorrenting.
And as for ISP's wanting to charge more? Why did you sell me a high speed link if you didn't expect me to actually use it?
It blows my mind... (Score:3, Insightful)
Well then, they can pay up to 50 cents and.. (Score:5, Insightful)
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!
Sure, but the USPS doesn't have caps (Score:5, Insightful)
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.
Re:Although there is a good streaming collection (Score:5, Insightful)
I believe they would stream the latest if they could get the rights to stream it.
Re:Margins (Score:4, Insightful)
While that is true, I understand most big rental companies get their DVDs at a fraction of the cost, in exchange for giving the movie companies a cut of each rental.
This is often the case, but the maximum price for any given rental is set by the price in the consumer DVD/DVD resale market. Thus prices are pushed down dramatically. "What you don't want to give us a break, okay, we'll just buy a couple from Ebay on the cheap." With streaming, there is no maximum so media producers push a lot harder. Netflix's rental by mail business is all that gives them leverage to push back, because they can't be "banned" by any media company until they comply with absurd licensing fees.
Re:Sure, but the USPS doesn't have caps (Score:4, Insightful)
Comcast's caps are (soft) 250GB.
At 2GB per movie streamed (and in my experience its less than half that), that's 125 movies.
A month.
Four a day.
"Up to $1" != $1 (Score:4, Insightful)
Re:Duh? (Score:5, Insightful)
Re:Duh? (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.
Re:Duh? (Score:5, Insightful)
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.
Re:Duh? (Score:4, Insightful)
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.
Re:Thats why (Score:5, Insightful)
If Comcast has its way, the Internet will be pay-television.
Re:Thats why (Score:5, Insightful)
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...
Re:Unfortunately (Score:3, Insightful)
No, they really aren't. I love action movies, I love explosions and loud scenes. Michael Bay movies are insipid pieces of garbage that make me long for the day when "action" meant something like "Last Man Standing." Instead, Bay gives us shaky-cam, close-up, slow-motion, impossible-to-follow "action" where every surface and substance on the planet is somehow explosive, and the characters do stupid, pointless things for no reason other than to give him the chance to have a "cool" chase sequence.
--Jeremy