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A lot of people seem to think that the recent price changes are done to discourage dvd rentals because they are less profitable. I see it the other way, the re

A lot of people seem to think that the recent price changes are done to discourage dvd rentals because they are less profitable. I see it the other way, the recent separation in prices were done to isolate dvd profits from the rest of netflix. Make no mistake that the studios are already working on deals that will bleed netflix dry. They will look to squeeze every last penny of profit out of the streaming division. By separating the 2 units, netflix is making sure the dvd unit can chug along merrily with their relatively fixed profits that the studios can't bargain for.

ChuckMcM 15y ago
I believe the studios will push people back to using streams that are 'free' and see their revenue go down to zero. I hope that eventually they will learn that the 'economic' cost of getting their content is limited by the 'opportunity' cost.
- seanalltogether 15y ago
  I completely agree, Netflix is about to face the same problem that cable and satellite operators have faced for years, which is having every provider come at them demanding a fixed cut of subscriber revenue. If the top 6 ( http://en.wikipedia.org/wiki/Major_film_studio#Today.27s_Big_Six http://en.wikipedia.org/wiki/Major_film_studio#Today.27s_Big... ) had their way, they would each demand at least $5 per subscriber for access to their content. The next 5 years are going to see netflix increasingly operating the streaming division on a razor thin profit margin while jacking up prices.
  - jasonwatkinspdx 15y ago
    I am not an expert on the industry, but from my armchair I think netflix will live or die by offering productions a better deal directly than the big studios. I expect some sort of anti-trust legal fight in an attempt to limit the lock in measures the big studios can put in the contracts they leverage.
    - ChuckMcM 15y ago
      Certainly if I were Netflix I would be thinking along those lines. Clearly the move to lock in some original content was part of the game here. The 'learning' that has to happen for the big content folks is the difference between 'some money' and 'no money.' Hopefully Netflix will help educate them in that regard.

ChuckMcM 15y ago

I believe the studios will push people back to using streams that are 'free' and see their revenue go down to zero. I hope that eventually they will learn that the 'economic' cost of getting their content is limited by the 'opportunity' cost.

seanalltogether 15y ago
I completely agree, Netflix is about to face the same problem that cable and satellite operators have faced for years, which is having every provider come at them demanding a fixed cut of subscriber revenue. If the top 6 ( http://en.wikipedia.org/wiki/Major_film_studio#Today.27s_Big_Six http://en.wikipedia.org/wiki/Major_film_studio#Today.27s_Big... ) had their way, they would each demand at least $5 per subscriber for access to their content. The next 5 years are going to see netflix increasingly operating the streaming division on a razor thin profit margin while jacking up prices.
- jasonwatkinspdx 15y ago
  I am not an expert on the industry, but from my armchair I think netflix will live or die by offering productions a better deal directly than the big studios. I expect some sort of anti-trust legal fight in an attempt to limit the lock in measures the big studios can put in the contracts they leverage.
  - ChuckMcM 15y ago
    Certainly if I were Netflix I would be thinking along those lines. Clearly the move to lock in some original content was part of the game here. The 'learning' that has to happen for the big content folks is the difference between 'some money' and 'no money.' Hopefully Netflix will help educate them in that regard.