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Comment by maratd | Hacker News Reader

It wasn't botched. Everything is by design. Qwikster or whatever they are calling, is a direct competitor to Netflix, in the same way that Blockbuster was a direct competitor to Netflix. It's the last generation tech. They want to kill it.

They want to kill it fast because streaming customers are more profitable. They want you to switch from physical media to streaming NOW.

Yes, yes, I know you can't get that esoteric or new release by streaming. There's a ton of stuff that never made it to DVD that is still on VHS or Beta. I don't see you crying over that.

Netflix knows this. They are accelerating the switch and they're doing that by killing their DVD division in the most horrid way possible. That game rental thing is a bone meant to mislead you and is absolutely pointless. That part of the rental industry is being killed off by Steam. They know that too.

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I'm curious, do you have numbers backing the higher profitability of their streaming business over DVD-by-mail?

I do agree that, if they wanted to get rid of their original line of business without looking like that's what they were doing, this would be the best way.

> I'm curious, do you have numbers backing the higher profitability of their streaming business over DVD-by-mail?

Simple reasoning will get you to that conclusion. There are no physical plants to maintain. No physical inventory to maintain. No postage costs.

You do have the costs of bandwidth, computing power, and licensing fees. I would imagine those are less than the above.

On top of that, they wouldn't be throwing everything into streaming unless they were making more money there. Even the most retarded of businesses will focus on a more profitable line than a less profitable one.

Yeah, you mention it, but I think you're vastly underestimating licensing costs. Hollywood / content producers have them over a barrel, especially now that they're spinning off the DVD business.

On top of that, those servers don't run themselves and those infrastructure costs you so quickly dismiss are significant.

This. When you own a DVD, you can rent it out as many times as you want and you don’t owe the studio another dime. When you have a digital movie on a server, every act of streaming it to a customer constitutes “copying”, subject to a license fee. And the studios want to milk that revenue source for all it’s worth and then some.

For other similar* businesses that I'm aware of, streaming isn't more profitable on a per unit basis as compared to DVD rental/sale (but subscriptions to unlimited streaming are much more profitable, because usage tails off but people don't cancel).

* similar = streaming and disc media - it's the adult space, not mainstream video

You're simple reasoning seems to be: "I don't know if the costs for handling physical media are cheaper than streaming low-latency high-bandwidth video over the internet, but I imagine that it is." I'm failing to see how "I imagine" == "simple reasoning." Just sayin'.

You're also making the assumption that aside from the distribution mechanisms, everything else is the same. That's far from the truth. Netflix most likely has to do separate deals with the content owners for DVD and for streaming that likely have vastly different terms.

You're also ignoring the possibility that Netflix views the DVD side of the business as a noose around their neck in negotiating deals for streaming content with the content providers, and the separation is an attempt to free up their hands.

It wasn't botched. Everything is by design.

I hope so, but it doesn't appear that way. Netflix has alienated a large number of its customers.

I know you can't get that esoteric or new release by streaming. There's a ton of stuff that never made it to DVD that is still on VHS or Beta. I don't see you crying over that.

Those are different issues. No one probably cares much about those esoteric shows you're talking about, but they certainly do care about whether they can get mainstream movies if they're paying a monthly fee for streaming. And right now, it's a wasteland: B-movies, old movies, and some UFO documentaries. Starz sometimes added something of worth, but Netflix blew that deal -- Starz is gone.

If all this activity by Netflix is part of some intelligent design, I'd really like to understand it, because right now, it looks more like a suicide attempt.

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