If you look at their SEC statements, specifically their latest 10-q you can see that "fullfillment expense" or the amount they spend to actually stuff and mail out DVD's is only 8.5% of their revenues, whereas subscription expense; - the cost to buy DVD's and license streaming content is around 52%. Over the last year or so, their net margins have increased due to the increasing expense of going to streaming. Whereas in a DVD, where you make a one time purchase of the DVD, streaming consists of licensing agreements and royalties that are likely paid on a per-play basis or on an unlimited use for a period of time basis. That is why stuff rotates in and out of streaming all the time. Add to it the fact that there are many, many more people that used the dvd service, and the fact the market for dvd's is many times that of streaming make dvd's much more profitable because there is a bigger user base to allocate the cost of business to. Streaming is expensive. you have to keep track of multiple licensing agreements, buy server space, band with and make sure everything is secure and backed up. The people shoving dvd's in a netflix envelope are cheap, the people maintaining your streaming content are expensive. Add to it the fact that there are far fewer streaming users, and on a per-customer basis, Netflix is making WAY more money off their dvd customers than their streaming ones.
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Topic: Netflix once again screws over its customers (Read 10157 times)
