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."
Although there is a good streaming collection (Score:5, Interesting)
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.
Re:Duh? (Score:5, Interesting)
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.
Re:Thats why (Score:4, Interesting)
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.
Re:Unfortunately (Score:2, Interesting)
Ignoring the obvious fact that you're trying to show how awesome you are for not watching all those non-indie films directed by Michael Bay, you know what? Every once in a while a Michael Bay movie is JUST what the doctor ordered. It's big, loud, over the top and the man certainly knows some folks who can make things explode.
Watching indie films doesn't make you better or smarter than other people. From my observations, people who talk about how they only watch indie films are FAR more annoying than the people who only watch Michael Bay movies. The latter generally aren't claiming to be sophisticated due to what they watch on their TV.
Re:Duh? (Score:4, Interesting)
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.
Re:Duh? (Score:4, Interesting)