5 ms·

Netflix: Streaming vs. DVD margins

54 points by nikhilpandit 15y ago

adamfeldman 15y ago
Did anyone even proofread this article? "....(adding 220 subscribers domestically in the quarter)....", "The streaming business also twice as many subscribers....."
- mikeklaas 15y ago
  It's TechCrunch.
- Terretta 15y ago
  Spreadsheet shows 0.22 meaning 220 thousand.
- Urgo 15y ago
  Haha, yeah I re-read that part over and over again too. Sort of ruined the whole article for me. 220. Come on now. Someone commented on TC that as well and 3 hours later no one fixed it either. You'd think their editors.. or someone read their own comments. sigh
MicahWedemeyer 15y ago
Funny that this posted the same time as Backblaze declaring DVD to be dead. http://blog.backblaze.com/2012/01/25/the-dvd-is-dead-usb-flash-drive-restores-are-here/ http://blog.backblaze.com/2012/01/25/the-dvd-is-dead-usb-fla...
- Terretta 15y ago
  Not so funny if you consider what people are paying for. Subscribers aren't paying for DVDs. They're paying to have an instant on movie that works offline. They're paying for the experience. Same for BackBlaze. You don't want a DVD data experience, why would you?
darkane 15y ago
The reasons for this are obvious, and probably have nothing to do with the cost, difficulty, or politics of streaming. It's more likely due to the majority of their by-mail customers routinely going inactive for months at a time, while still paying for the service. That inactivity is so well known that it became a talking point in social commentary and has even been the punchline of late night jokes.
- waterlesscloud 15y ago
  Yeah, I wonder if the per-user profitability will fall now. It would make sense that the remaining DVD users are largely ones who are making a decision to stay with it because they actually use it.
- Roboprog 15y ago
  Ouch. That's exactly what happens to us: 2 disks, that we wait a month to remember to send back. The article does point out the "for now" aspect, though. "f(x) = DVD profits" is large, but with a negative derivative, while "g(x) = Streaming profits" is smaller, but with a positive (first order, at this point?) derivative.
Lagged2Death 15y ago
The old DVD-by-mail model was hugely profitable, so they decided to confuse everyone by re-branding it? What?
PaulMest 15y ago
I'm guessing Netflix is highlighting this to negotiate better prices for their content while also signaling to the market this isn't a business others should enter. I get the sense that Netflix is splitting up these numbers to help their content partners realize that they are killing a potential golden goose. Nobody has been as successful as Netflix with streaming legally licensed content... and from reading other articles, content partners kept raising their rates substantially as Netflix was growing. With this move, it's clear that the established DVD business-model has strong margins and the online business could be drastically hurt if content partners raise their rates any higher.

54 points by nikhilpandit 15y ago

Did anyone even proofread this article? "....(adding 220 subscribers domestically in the quarter)....", "The streaming business also twice as many subscribers....."

mikeklaas 15y ago
It's TechCrunch.
Terretta 15y ago
Spreadsheet shows 0.22 meaning 220 thousand.
Urgo 15y ago
Haha, yeah I re-read that part over and over again too. Sort of ruined the whole article for me. 220. Come on now. Someone commented on TC that as well and 3 hours later no one fixed it either. You'd think their editors.. or someone read their own comments. sigh

MicahWedemeyer 15y ago

Funny that this posted the same time as Backblaze declaring DVD to be dead. http://blog.backblaze.com/2012/01/25/the-dvd-is-dead-usb-flash-drive-restores-are-here/ http://blog.backblaze.com/2012/01/25/the-dvd-is-dead-usb-fla...

Terretta 15y ago
Not so funny if you consider what people are paying for. Subscribers aren't paying for DVDs. They're paying to have an instant on movie that works offline. They're paying for the experience. Same for BackBlaze. You don't want a DVD data experience, why would you?

darkane 15y ago

The reasons for this are obvious, and probably have nothing to do with the cost, difficulty, or politics of streaming. It's more likely due to the majority of their by-mail customers routinely going inactive for months at a time, while still paying for the service. That inactivity is so well known that it became a talking point in social commentary and has even been the punchline of late night jokes.

waterlesscloud 15y ago
Yeah, I wonder if the per-user profitability will fall now. It would make sense that the remaining DVD users are largely ones who are making a decision to stay with it because they actually use it.
Roboprog 15y ago
Ouch. That's exactly what happens to us: 2 disks, that we wait a month to remember to send back. The article does point out the "for now" aspect, though. "f(x) = DVD profits" is large, but with a negative derivative, while "g(x) = Streaming profits" is smaller, but with a positive (first order, at this point?) derivative.

Lagged2Death 15y ago

The old DVD-by-mail model was hugely profitable, so they decided to confuse everyone by re-branding it? What?

PaulMest 15y ago

I'm guessing Netflix is highlighting this to negotiate better prices for their content while also signaling to the market this isn't a business others should enter. I get the sense that Netflix is splitting up these numbers to help their content partners realize that they are killing a potential golden goose. Nobody has been as successful as Netflix with streaming legally licensed content... and from reading other articles, content partners kept raising their rates substantially as Netflix was growing. With this move, it's clear that the established DVD business-model has strong margins and the online business could be drastically hurt if content partners raise their rates any higher.