Netflix: Streaming vs. DVD margins

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.

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

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.

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

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-fla...