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."
Duh? (Score:2)
Umm... Is this news to anyone? Ok, perhaps the exact figure of 20x, but otherwise?
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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.
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.
"Up to $1" != $1 (Score:4, Insightful)
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But they *DID* start to throttle customers like us (yes, I ship back quickly too). Don't you remember all the news about it? Lots of customers complained loudly, and rightfully so- there was nothing in the terms or agreement that allowed Netflix to throttle. They were doing it secretly on plans listed as "unlimited" (sound familiar- like secret cell phone data caps?). I remember quite well being throttled and being penalized at the end of the month when they decided I had rented too much. But then, aft
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It's is claimed between 1.8 and 3 GB per movie [streamingmedia.com]. Quite a bit less than DVD bitrate, but it's not 350 MB/hr like a lot of torrents used to be, either.
Subjectively, I think the visual quality of HD netflix streams easily surpasses DVD, evidently due to more efficient encoding. (Maybe I'm just not watching enough visually-frenzied action movies).
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Umm... Is this news to anyone? Ok, perhaps the exact figure of 20x, but otherwise?
I'm sure there are many who still think DVD-over-net is expensive.
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Stuck out in cap-ville (Score:3)
this assumes that you purchased your broadband connection to do noting but watch movies.
Or that you're stuck out in cap-ville and have to buy your Internet access in 5 GB/mo units. Satellite and 3G are like this.
Re:Duh? (Score:4, Funny)
Or the very large arrays some make to backup their BluRay collection.
Pfft. That's nothing compared to my Peta-byte storage array.
~$ df -h
Filesystem Size Used Avail Use% Mounted on
/dev/sda1 680G 5.8G 640G 1% /
/dev/md0 44P 13P 32P 29% /mnt/sys
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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.
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:Duh? (Score:4, Interesting)
Re:Duh? (Score:5, Insightful)
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:Duh? (Score:5, Informative)
"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?
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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.
Good Plan (Score:2)
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Seriously? My wife and I watch maybe 40-50 hours a month of Netflix Streaming content over our Comcast connection, and have only had a problem once. I'll live with that to have an entire content library at my fingertips.
If only there were rules... (Score:2)
Until....buffering......buffering..... pesky.....buffering...buffering.... Comcast et al does their dirty deeds.
Huh. If only the someone would adopt rules that specifically preventing ISPs from block, degrading, or discriminating against content providers that compete with services offered by the ISPs, particularly calling out voice and video services.
Oh, wait, they did [fcc.gov].
From Comcast to NetFlix (Score:2)
You knows it would be a real shame if that stream of yours got slowed down..
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Comcast has oversold your local drop or you need your lines fixed.
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.
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?
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They actually have lots of pretty decent indie and foreign films. If you really must have something that Michael Bay directed you can always get the DVD.
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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 o
Re:Unfortunately (Score:4, Informative)
Last 15 Years List [cloudapp.net].
Requires Silver Light. It's pretty cool.
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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.
The flip side of that, though, is that you can find stuff to watch while you're waiting for the next batch of stuff to arrive.
I agree with you whole-heartedly, but it hasn't been as impactful as I first imagined.
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This is why they sometimes have one episode missing from a season of a show they stream.
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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.
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Re:Margins (Score:5, Informative)
...wouldn't they still need some special license to rent out the DVDs?
No, the media companies lost that battle long ago.Legally you can rent out movies you own, so long as you have the physical media, aren't copying that media, and aren't renting them for public viewing.
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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.
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:Margins (Score:5, Informative)
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Under US law, no [wikipedia.org]. In any other jurisdiction, check your local law.
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Netflix has a market cap bigger than some studios. If they want the content, they'll just buy the studios or the copyright rights wholesale. Who is going to stop them? Blockbuster?
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: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.
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No, they just can't get deals to stream those at low enough prices. Also they will not "saturate the Internet", please learn something about CDNs.
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!
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Even a full DVD9(8.54GB) would take a touch under 13 hours at 1.5Mb/s. Assuming some amount of ISP
Pass the cost on and continue offering both (Score:2)
Don't live in the US, and don't know how Netflix operates. But the way I see it...
A lot of people won't blink at an extra $1 per DVD to hire movies in a way that is convenient to them. Not everyone has high speed unlimited broadband. If peoplewant physical media and postage they can pay for it. A $0.95 fee per DVD probably won't phase anyone, where as $700M per year might be too much for a company to absorb.
However, I do wonder how many DVDs are lost or damaged and what the loss from that is...that might ma
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I don't know about your area, but in this area, blockbuster has thoroughly gone extinct in terms of brick and mortar presence. Basically, netfilx is the only offering currently doing both streaming and nationwide disc access. Now you could do one company for streaming, and redbox for another.
I also seem to recall some idea for Blockbuster to do Redbox like kiosks, but streaming video and letting people walk away with them on customer provided flash memory instead of on discs.
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$1 per DVD?
I pay $20 per month for 3 at a time and go through probably 15 movies a month. No way would I pay another $1 per DVD. There is nearly no environmental factor, those mail trucks run with netflix or not.
Volume Comparison (Score:5, Insightful)
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I figure it will only be a matter of time before the studios make it cheaper to send things by Snail Mail.
It's just in their nature to be greedy beyond sustainable levels and to squeeze their customer facing distributors (like movie theatres).
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Yes, but somebody wins when you cut costs. If you stream more movies, the customer gets more and is probably willing to pay more. Or you can create a limited streaming subscription for people that watch less than X hours with the same price but higher margins. Or lower the prices and make it up on volume. Or maybe it goes straight to Netflix's profits. Either way someone ends up better off (except the postal service).
War against Netflix (Score:5, Informative)
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...
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That would explain why streaming from my PS3 is so shitty compared to my computer.
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you have bandwidth providers (mainly cable) trying to kill Netflix outright by rate shaping the traffic.
Oh, heck, my Roku can't even deal with Comcast's Powerboost. It sees the initial availability of high bandwidth to Netflix, tries to run at full quality, then once the buffer is exhausted finds it needs to re-buffer back to a lower quality.
I'd really really like to be able to tell it to just run at 3-dots quality all the time. Heck, I'd probably take 2-dots most of the time if the content wasn't visual
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Content providers are at war with Netflix, and Netflix is differentiating Classes of Service depending on hardware used.
[...]
Start the Netflix viewer on each device. Note that they each have different data centers that they reach out to. Always.
That could be discrimination in class of service, it could be that they use platform-specific DRM systems on the user end, and that they support that with separate servers because its just easier to do that way.
This is a known problem with Apple TV (Score:5, Informative)
Apple TV uses a bad setting for DNS by default. See here [appleinsider.com] for a description of the problem and solutions.
It's not Netflix's fault, surprisingly enough.
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Apple TV doesn't use a "bad setting" by default. They use whatever you set it to or whatever your DHCP server tells it to use. If you have that set to OpenDNS or Google DNS or whatever you break Akamia. If you have it set to your ISP's DNS which most people will, you have no issue.
Now if only... (Score:2)
Now if only they'd get Season 7 of "The Office".
I realize that's almost a complete non-sequiter. I just want to see Season 7, and I don't want to put up with Hulu's commercials.
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Yeah, that's going to kill Hulu, I bet. The number of people who just aren't going to watch commercials with their content any more is going nowhere but up.
It blows my mind... (Score:3, Insightful)
Too bad In Canada (Score:5, Informative)
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!
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!
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...and a hundred new movies seem to be added weekly.
Don't get me wrong, I love watching bad movies. But of those 100 added every week maybe 2 or 3 are decent and everything else is terrible or B-Movie.
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No, it's not the "cable TV killer" because in most cases, that's who is providing the broadband pipe. And when it's not ... it's the phone company, which may also be selling you "cable" (See: Verizon FIOS) and/or "on-demand" content.
This is why Comcast wants to double-dip and change you AND Netflix for your internet connection. Without government regulation it will never be cheaper to stream the same content available from the last-mile provider; the last-mile provider will prevent that from occurring.
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I have been using Comcast for internet for 10 years (well Time Warner and then Comcast).
However, I don't use Warner/Comcast cable TV and haven't for ages because their signal quality is bad. It's digital so they must just be pumping in crap or overcompressing. So I went to Dish and they kept inching up my rates. I finally cut them when I cut a $10 service to get the price down and next month they raised my rates by $10.
I'm willing to pay about $40 for cable TV( and the loss leader ads are always 29.95).
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Ironically, shortly before that, I started doing business with Comcast. Netflix/Hulu did kill 'cable TV' for me, but because of some serious monopoly shinanagans by AT&T, it didn't kill paying a bill for Comcast servi
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I fail to understand how the heck you're able to stream a movie on 800 kilopers bit second
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.
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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.
Hmm. (Score:2)
2M DVDs per day, ~300 shipping days per year (assume they don't ship on Sundays or holidays), that's about $600M.
But how on earth do we conclude that they spend "more" on shipping than they do on streaming? Do we have a number for how many movies they stream? I don't.
Oil companies aren't going to like that. (Score:2)
what about comcast? (Score:2)
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?
Look at the overall cost of transport... (Score:2)
When netflix ships a DVD, they pay $1 and nobody else pays. I don't pay to receive the DVD at my house.
When you stream a DVD, not only does netflix have to pay for bandwidth (akin to the $1 / movie with physical shipping), but the receiver has to pay for bandwidth to receive it as well. I don't have to pay for my mailbox, however, you could say that I have to pay rent/mortgage.
It's also cheaper b/c with streaming none of the bandwidth is dedicated to a specific user but is applied to all users. Whereas t
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The marginal cost of receiving data is often zero.
Or, as Tanenbaum might say... (Score:2)
Never underestimate the cost of a station wagon full of tapes hurtling down the highway.
Is there a Slashdot category for "Duh"? (Score:3)
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.
All Netflix had to do was wait out Blockbuster.... (Score:2)
kill the goose that laid the golden egg (Score:2)
Netflix got a sweetheart deal on a lot of the content streaming. There's talk that the content providers want a far bigger cut the next go around.
Netflix created a market for them that they didn't even realize was possible and now they're bitching about not getting a big enough cut. I like that Amazon is funding their own studio. Create better content and to hell with the studios.
Too bad their streaming options are limited (Score:2)
At least for what I'm looking for. Every now and then I figure, "Hey! I'll watch X! I've got a couple hours, why not?" And of course, you can't stream X. Happens a couple times a week to me.
Of course, then there's the case of the missing series in my instant queue. I had farscape on there, checked back in Dec...it had been moved to disk only. Crappy and annoying. Then it reappeared in my instant queue in January. No explanation.
I love the entire idea of streaming movies, but they need to get things
I would like to see local caching (Score:3)
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.
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Problem is, it is VERY difficult to implement content-provider-friendly DRM on Linux.
Content providers still insist on DRMing what they can, despite the fact that many of their delivery methods are known to be fully compromised. (They're dumbasses like that.)
I mean, who cares if Netflix streaming can be ripped when the higher-quality DVD is 100% compromised, and even Blu-Ray is compromised?
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The same applies equally well to any other form of movie distribution including Snail Mail.
The crappiness of Netflix streaming is grossly overstated. Apple fanboys screaming sour grapes perhaps?
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It's improving rapidly.
Their selection now is MUCH better than it was six months or so ago. (They have recently made quite a few deals with content providers, those deals are why the bumped up prices a bit.)
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Or really good indie films or foreign ones.
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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.
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.
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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 comp
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:Thats why (Score:5, Insightful)
If Comcast has its way, the Internet will be pay-television.
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You should really invest the $0 an ad-blocker will cost you.