5 ms·

I would do a whole lot more digital rentals if the prices weren't so damn high. How is it that it can be significantly cheaper to rent the physical disk than to

I would do a whole lot more digital rentals if the prices weren't so damn high. How is it that it can be significantly cheaper to rent the physical disk than to stream the movie once? How can I watch 20 hours of stuff on HBO in 4k for like $10 or $12 or whatever that runs now for a month, but a single 2-hour movie is $5? It'd also help a lot if I didn't need a different "app" for every store, with its own player UI. Learning how to use yet another designer's cute "experience" just to do the same thing I used to do with a few buttons on the front of a VCR that were the same for every single movie, isn't my idea of fun.

lotsofpulp 4y ago
> How is it that it can be significantly cheaper to rent the physical disk than to stream the movie once? Price discrimination or price segmentation is the technical name. If you are selling an identical good which has near zero marginal cost to reproduce, then the way to maximize your profit is to sell it to each person for the maximum they are willing to pay. Ideally, you want to sell (or rent) the same movie or tv show or song to someone willing to pay $5 for $5, $10 for $10, and $1 for $1. In practice, it is logistically infeasible to target each and every person’s maximum price, but you can try to target populations as a whole. For example, grocery stores with no discount to people who are willing to pay more, versus giving out paper coupons or online coupons to those willing to spend time to save money. In media’s case, I am assuming that the media sellers are betting the people willing to buy online are willing to pay more, on average, than people willing to go through all the trouble of renting a physical disk. At least in my case, it would ring true. If I really wanted to see something, I would not care about paying $5 in the moment on my TV and start watching in seconds, rather than remembering to get and dealing with a disc from a Redbox kiosk for $1. But there are people who would want to save the $4, and so the content sellers are able to get $5 from me and $1 from the person using Redbox (although they are also losing sales from people not willing to buy at $5 online, and not willing to pay $1 at a Redbox, but the bet is that population is smaller than the total of the other populations).
- mason55 4y ago
  To put it another way, you're literally paying for convenience.
dylan604 4y ago
If you want to sugar to help the medicine go down... Compare the current digital rental prices to taking yourself to the theater. While the digital rental rate is high, it is less than one ticket for admission. If you buy concessions, it only goes up. If you take someone else, it gets higher. That one digital rental starts to look less steep from this vantage point. That being said, I still don't do the digital rental.
dataflow 4y ago
> How is it that it can be significantly cheaper to rent the physical disk than to stream the movie once? Note you're not just paying the marginal cost, you're also paying for the streaming infrastructure they invested in setting up.
- brimble 4y ago
  Yes, of course, but that's still much cheaper than physical disk distribution.
  - Godel_unicode 4y ago
    Is it? Stamping and shipping discs costs very little, the license is the major cost in most cases. Edit: very old numbers can be found here. https://arstechnica.com/uncategorized/2006/03/6400-2/ https://arstechnica.com/uncategorized/2006/03/6400-2/
  - therealdrag0 4y ago
    How do you know? I’m a highly paid engineer who is oncall on a SAAS, it’s been a wild ride. It’s expensive to keep this crap running. But a DVD burner and fedex? That sounds cheap and simple to me.
    - srdone 4y ago
      There are companies that provide on-demand pricing for just the steaming component (edgecast for example). Then just throw up a DynamoDB table and some simple apis in lambda and you have a pretty cheap (relatively) way to deliver streamed content.
      - therealdrag0 4y ago
        Good point but that’s just MVP; to maintain their competitive edge they have to maintain a lot more features on top of that.
    - jdmichal 4y ago
WalterBright 4y ago
> How is it that it can be significantly cheaper to rent the physical disk than to stream the movie once? The cost to build out the infrastructure to stream movies is tremendous.
- brimble 4y ago
  Is it somehow cheaper when it's a subscription, and when the set of things you might start streaming isn't "this single thing I just paid for" but "anything in your catalog"? Because they don't just give a discount for that—they give a tremendous discount.
phnofive 4y ago
First Sale doctrine - you needn't pay any licensing fees to rent out a purchased disc. Practically speaking, Blockbuster that was did have special arrangements with the studios, but this paved the way for Netflix to rent out DVDs with little barrier to entry.

lotsofpulp 4y ago

> How is it that it can be significantly cheaper to rent the physical disk than to stream the movie once? Price discrimination or price segmentation is the technical name. If you are selling an identical good which has near zero marginal cost to reproduce, then the way to maximize your profit is to sell it to each person for the maximum they are willing to pay. Ideally, you want to sell (or rent) the same movie or tv show or song to someone willing to pay $5 for $5, $10 for $10, and $1 for $1. In practice, it is logistically infeasible to target each and every person’s maximum price, but you can try to target populations as a whole. For example, grocery stores with no discount to people who are willing to pay more, versus giving out paper coupons or online coupons to those willing to spend time to save money. In media’s case, I am assuming that the media sellers are betting the people willing to buy online are willing to pay more, on average, than people willing to go through all the trouble of renting a physical disk. At least in my case, it would ring true. If I really wanted to see something, I would not care about paying $5 in the moment on my TV and start watching in seconds, rather than remembering to get and dealing with a disc from a Redbox kiosk for $1. But there are people who would want to save the $4, and so the content sellers are able to get $5 from me and $1 from the person using Redbox (although they are also losing sales from people not willing to buy at $5 online, and not willing to pay $1 at a Redbox, but the bet is that population is smaller than the total of the other populations).

mason55 4y ago
To put it another way, you're literally paying for convenience.

dylan604 4y ago

If you want to sugar to help the medicine go down... Compare the current digital rental prices to taking yourself to the theater. While the digital rental rate is high, it is less than one ticket for admission. If you buy concessions, it only goes up. If you take someone else, it gets higher. That one digital rental starts to look less steep from this vantage point. That being said, I still don't do the digital rental.

dataflow 4y ago

> How is it that it can be significantly cheaper to rent the physical disk than to stream the movie once? Note you're not just paying the marginal cost, you're also paying for the streaming infrastructure they invested in setting up.

brimble 4y ago
Yes, of course, but that's still much cheaper than physical disk distribution.
- Godel_unicode 4y ago
  Is it? Stamping and shipping discs costs very little, the license is the major cost in most cases. Edit: very old numbers can be found here. https://arstechnica.com/uncategorized/2006/03/6400-2/ https://arstechnica.com/uncategorized/2006/03/6400-2/
- therealdrag0 4y ago
  How do you know? I’m a highly paid engineer who is oncall on a SAAS, it’s been a wild ride. It’s expensive to keep this crap running. But a DVD burner and fedex? That sounds cheap and simple to me.
  - srdone 4y ago
    There are companies that provide on-demand pricing for just the steaming component (edgecast for example). Then just throw up a DynamoDB table and some simple apis in lambda and you have a pretty cheap (relatively) way to deliver streamed content.
    - therealdrag0 4y ago
      Good point but that’s just MVP; to maintain their competitive edge they have to maintain a lot more features on top of that.
  - jdmichal 4y ago

WalterBright 4y ago

> How is it that it can be significantly cheaper to rent the physical disk than to stream the movie once? The cost to build out the infrastructure to stream movies is tremendous.

brimble 4y ago
Is it somehow cheaper when it's a subscription, and when the set of things you might start streaming isn't "this single thing I just paid for" but "anything in your catalog"? Because they don't just give a discount for that—they give a tremendous discount.

phnofive 4y ago

First Sale doctrine - you needn't pay any licensing fees to rent out a purchased disc. Practically speaking, Blockbuster that was did have special arrangements with the studios, but this paved the way for Netflix to rent out DVDs with little barrier to entry.