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Mail Service Costs Netflix 20x More Than Streaming

samzenpus posted more than 3 years ago | from the costly-snail dept.

The Internet 473

Jake writes "Netflix currently pays up to $1 per DVD mailed round trip, and the company mails about 2 million DVDs per day. By comparison, the company pays 5 cents to stream the same movie. In other words, the company pays 20 times more in postage per movie than it does in bandwidth. Doing some simple math, Netflix is spending some $700 million per year in physical disk postage. Rising content prices are offset by declining postage fees for the company, as more and more users choose the streaming-only option. Furthermore, subscriber revenues will continue to increase as Netflix increases the size of its streaming library."

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Thats why (1)

bchickens (255621) | more than 3 years ago | (#34930774)

they raised my plan! Arg! Damn them and there streaming media that has nowhere near enough titles!

Re:Thats why (2)

kellyb9 (954229) | more than 3 years ago | (#34931044)

they raised my plan! Arg! Damn them and there streaming media that has nowhere near enough titles!

If all you use is the streaming service, they lowered your plan :-D.

Duh? (1)

fahrbot-bot (874524) | more than 3 years ago | (#34930782)

Mail Service Costs Netflix 20x More Than Streaming

Umm... Is this news to anyone? Ok, perhaps the exact figure of 20x, but otherwise?

Re:Duh? (1)

MoonBuggy (611105) | more than 3 years ago | (#34931010)

It's a surprising disparity, at least to me. If I'd made an offhand guess I would have probably estimated $0.15 in bandwidth or maybe $0.60 in postage - only a factor of four. Not something that'll keep me up at night, sure, but a moderately interesting little bit of information.

Seems like half decent "News for Nerds" in my opinion.

Re:Duh? (1)

h00manist (800926) | more than 3 years ago | (#34931202)

Mail Service Costs Netflix 20x More Than Streaming

Umm... Is this news to anyone? Ok, perhaps the exact figure of 20x, but otherwise?

I'm sure there are many who still think DVD-over-net is expensive.

Re:Duh? (1)

Obfuscant (592200) | more than 3 years ago | (#34931330)

I'm sure there are many who still think DVD-over-net is expensive.

Well, most of those people are probably including what they pay for THEIR connection in the total and not caring what Netflix pays for its connection.

If you pay $50/month for broadband and watch 50 movies/month, your effective cost per movie is $1 plus the cost of Netfix itself. When you are done watching the movie, you have nothing but happy memories.

If you use the by-mail version of Netflix, you pay nothing for postage and pay only the Netflix membership fee. Industrious users will wind up with not only a happy memory of the movie, but their own backup copy of it for later viewing.

I can tell you which way sounds like a better deal to me. I don't believe I could watch 50 movies per month, so my numbers would be more like ten, at most, or $5/movie. I would have to write off the cost of the Tb disk to keep all the video on, though. ...

Good Plan (1)

SuperCharlie (1068072) | more than 3 years ago | (#34930812)

Until....buffering......buffering..... pesky.....buffering...buffering.... Comcast et al does their dirty deeds.

Re:Good Plan (1)

TooMuchToDo (882796) | more than 3 years ago | (#34931182)

Seriously? My wife and I watch maybe 40-50 hours a month of Netflix Streaming content over our Comcast connection, and have only had a problem once. I'll live with that to have an entire content library at my fingertips.

Re:Good Plan (1)

morari (1080535) | more than 3 years ago | (#34931308)

An entire content library, really? I can hardly ever find anything worth watching through Netflix's streaming option. On the other hand, I have hundreds of DVDs sitting in my queue. Besides... I get to rip and/or burn the DVDs and mail 'em back the very same day. I get good turn around. ;)

Re:Good Plan (0)

Anonymous Coward | more than 3 years ago | (#34931312)

Same here. Currently about 95% of our TV usage is Netflix streaming. We went from using a few GB of data a month on Comcast to over a 100GB. No problems at all for the few months we've been on the service.

I wonder how much more this is actually costing Comcast and when those costs will be passed on to us users as more and more people stream more.

If only there were rules... (1)

DragonWriter (970822) | more than 3 years ago | (#34931224)

Until....buffering......buffering..... pesky.....buffering...buffering.... Comcast et al does their dirty deeds.

Huh. If only the someone would adopt rules that specifically preventing ISPs from block, degrading, or discriminating against content providers that compete with services offered by the ISPs, particularly calling out voice and video services.

Oh, wait, they did [fcc.gov] .

From Comcast to NetFlix (1)

LWATCDR (28044) | more than 3 years ago | (#34931270)

You knows it would be a real shame if that stream of yours got slowed down..

Re:Good Plan (2)

joocemann (1273720) | more than 3 years ago | (#34931344)

Comcast has oversold your local drop or you need your lines fixed.

Unfortunately (5, Insightful)

BrianRoach (614397) | more than 3 years ago | (#34930818)

I don't want to watch old movies or flops all the time.

Their streaming selection is ok for TV shows, but for movies it's fairly poor. This is no doubt directly due to the MPAA restricting what they can stream.

Re:Unfortunately (4, Insightful)

MrDoh! (71235) | more than 3 years ago | (#34930864)

Totally. I'd be happy paying another 10bucks on what I currently pay to be able to stream something released in the last 15 years.
Caught up on my early 80's Zombie flicks, just want more recent (well, better!) films... Big film companies need to make this work as an awesome service before everyone heads back to Bittorrenting.

And as for ISP's wanting to charge more? Why did you sell me a high speed link if you didn't expect me to actually use it?

Re:Unfortunately (0)

Anonymous Coward | more than 3 years ago | (#34931018)

For your money?

Re:Unfortunately (2, Informative)

h4rr4r (612664) | more than 3 years ago | (#34931214)

They actually have lots of pretty decent indie and foreign films. If you really must have something that Michael Bay directed you can always get the DVD.

Re:Unfortunately (1)

kellyb9 (954229) | more than 3 years ago | (#34931022)

Streaming is slowely taking over their entire model. They have plans that don't even include the disk service. I'm assuming that as more and more people have set top boxs/game consoles, they'll have a better selection. It really isn't that terrible at this point compared to other comparable services.

Re:Unfortunately (1)

Anonymous Coward | more than 3 years ago | (#34931158)

I was speaking with a CS rep at Netflix recently, and they told me getting the licensing worked out for streaming is a real PITA and that something as simple as one Artist on one Track on the Soundtrack who isn't cooperating can hold up and entire movie/show from being able to be streamed.

Re:Unfortunately (2)

h4rr4r (612664) | more than 3 years ago | (#34931232)

This is why they sometimes have one episode missing from a season of a show they stream.

Re:Unfortunately (1)

MobileTatsu-NJG (946591) | more than 3 years ago | (#34931284)

I don't want to watch old movies or flops all the time.

Their streaming selection is ok for TV shows, but for movies it's fairly poor. This is no doubt directly due to the MPAA restricting what they can stream.

The flip side of that, though, is that you can find stuff to watch while you're waiting for the next batch of stuff to arrive.

I agree with you whole-heartedly, but it hasn't been as impactful as I first imagined.

Not MPAA, studios (1)

SuperKendall (25149) | more than 3 years ago | (#34931332)

They do have some recent stuff (like Alice in Wonderland for example).

But you can't blame the MPAA for this one, they are not involved. It's up to individual studios to decide to allow streaming or not. Many of them seem reluctant to let what they view as hot properties go on Netflix for what they view as a pittance (witness HBO's stance that Netflix users have to pay $30/month before Netflix will get HBO shows).

What I think will happen is that more people will switch to streaming and big studios will see rental revenue decline if they do not join. At some point Netflix will have to reach a compromise and charge somewhat more (not sure how much) in return for getting the "real" movies.

I don't really mind the current situation though as for the movies I care about more, I prefer to rent a blu-ray anyway for picture quality. Netflix HD is good (when a show is even in HD!), but just not nearly as good as physical media.

Re:Unfortunately (1)

joocemann (1273720) | more than 3 years ago | (#34931356)

I agree a million fold.

I am hoping these findings will give netflix some incentive to get us streams of everything they make available.

Margins (4, Insightful)

99BottlesOfBeerInMyF (813746) | more than 3 years ago | (#34930820)

This article seems to be missing something important. How much does Netflix pay to the content provider for a license per movie played? Last I saw, estimates for most big players were something like $.50 to $.80 per view. For DVD's Netflix has to maintain a huge network of warehouses, staff, and buy replacements for what is broken, and the shipping, but in many cases that still seems to be cheaper than getting a license to stream the same film.

Re:Margins (2)

donnyspi (701349) | more than 3 years ago | (#34930892)

wouldn't they still need some special license to rent out the DVDs?

Re:Margins (4, Informative)

99BottlesOfBeerInMyF (813746) | more than 3 years ago | (#34930964)

...wouldn't they still need some special license to rent out the DVDs?

No, the media companies lost that battle long ago.Legally you can rent out movies you own, so long as you have the physical media, aren't copying that media, and aren't renting them for public viewing.

Re:Margins (1)

doconnor (134648) | more than 3 years ago | (#34931100)

While that is true, I understand most big rental companies get their DVDs at a fraction of the cost, in exchange for giving the movie companies a cut of each rental.

Re:Margins (3, Insightful)

99BottlesOfBeerInMyF (813746) | more than 3 years ago | (#34931180)

While that is true, I understand most big rental companies get their DVDs at a fraction of the cost, in exchange for giving the movie companies a cut of each rental.

This is often the case, but the maximum price for any given rental is set by the price in the consumer DVD/DVD resale market. Thus prices are pushed down dramatically. "What you don't want to give us a break, okay, we'll just buy a couple from Ebay on the cheap." With streaming, there is no maximum so media producers push a lot harder. Netflix's rental by mail business is all that gives them leverage to push back, because they can't be "banned" by any media company until they comply with absurd licensing fees.

Re:Margins (5, Informative)

kdawgud (915237) | more than 3 years ago | (#34930990)

First sale doctrine says they can do whatever they want with the DVDs once they buy them...

Re:Margins (1)

jgtg32a (1173373) | more than 3 years ago | (#34930998)

Nope, First sale doctrine

Re:Margins (1)

Kjella (173770) | more than 3 years ago | (#34931062)

Under US law, no [wikipedia.org] . In any other jurisdiction, check your local law.

Re:Margins (1)

TooMuchToDo (882796) | more than 3 years ago | (#34931194)

Netflix has a market cap bigger than some studios. If they want the content, they'll just buy the studios or the copyright rights wholesale. Who is going to stop them? Blockbuster?

Although there is a good streaming collection (4, Interesting)

Rooked_One (591287) | more than 3 years ago | (#34930836)

I tend to see that very popular movies (especially new releases) are not up for streaming.

You have to know that Netflix realizes they are saturating the internet, and perhaps they are doing us a favor by biting the bullet when it comes to paying a little more to ship... Maybe... I'd say they are one heck of a non conformist company if this is the case... But i'm going to say its pure laziness until I hear otherwise.

Re:Although there is a good streaming collection (4, Insightful)

Cwix (1671282) | more than 3 years ago | (#34930952)

I believe they would stream the latest if they could get the rights to stream it.

Re:Although there is a good streaming collection (1)

h4rr4r (612664) | more than 3 years ago | (#34931246)

No, they just can't get deals to stream those at low enough prices. Also they will not "saturate the Internet", please learn something about CDNs.

Streaming is great if you like bad movies (0)

Saint Stephen (19450) | more than 3 years ago | (#34930838)

If you like really old and/or REALLY REALLY bad (think: unbearably awful), then Netflix Streaming is for you. Except for the occasional non-stinker.

Re:Streaming is great if you like bad movies (1)

jedidiah (1196) | more than 3 years ago | (#34931042)

The same applies equally well to any other form of movie distribution including Snail Mail.

The crappiness of Netflix streaming is grossly overstated. Apple fanboys screaming sour grapes perhaps?

Re:Streaming is great if you like bad movies (1)

Duradin (1261418) | more than 3 years ago | (#34931328)

Why Apple fanboys? There's a Netflix app for iOS and I believe you can go to their webpage with Safari under OSX.

Re:Streaming is great if you like bad movies (1)

Andy Dodd (701) | more than 3 years ago | (#34931094)

It's improving rapidly.

Their selection now is MUCH better than it was six months or so ago. (They have recently made quite a few deals with content providers, those deals are why the bumped up prices a bit.)

Re:Streaming is great if you like bad movies (1)

h4rr4r (612664) | more than 3 years ago | (#34931268)

Or really good indie films or foreign ones.

Re:Streaming is great if you like bad movies (1)

Scott64 (1181495) | more than 3 years ago | (#34931340)

There's also a lot of content for children, which is why I subscribe (because I'm a parent...not because I'm a child :P)

And some of us marginalized (3, Insightful)

franknagy (56133) | more than 3 years ago | (#34930844)

Some of us are stuck with "braodband" in the 1.5Mbps and movie streaming is
just not an option. May the telcom industry go stuff itself!

wake me up when the streaming service works (0)

Anonymous Coward | more than 3 years ago | (#34930854)

It only ever told me that my operating system was not supported.

Pass the cost on and continue offering both (1)

syousef (465911) | more than 3 years ago | (#34930856)

Don't live in the US, and don't know how Netflix operates. But the way I see it...

A lot of people won't blink at an extra $1 per DVD to hire movies in a way that is convenient to them. Not everyone has high speed unlimited broadband. If peoplewant physical media and postage they can pay for it. A $0.95 fee per DVD probably won't phase anyone, where as $700M per year might be too much for a company to absorb.

However, I do wonder how many DVDs are lost or damaged and what the loss from that is...that might make the DVDs more expensive.

There is also the environmental factor. I'm not sure how much fossil fuel is being used and greenhouse gas produced shuffling DVDs around.

Re:Pass the cost on and continue offering both (1)

Dthief (1700318) | more than 3 years ago | (#34931036)

If the increase the price people will just go to other services.....e.g. blockbuster who has (probably) similar amount to stream and easier access to discs because of their brick and mortar stores/infrastructure. I use and enjoy netflix's service, but if they increase the price again I'll start looking at what else there is.

Re:Pass the cost on and continue offering both (1)

Junta (36770) | more than 3 years ago | (#34931256)

I don't know about your area, but in this area, blockbuster has thoroughly gone extinct in terms of brick and mortar presence. Basically, netfilx is the only offering currently doing both streaming and nationwide disc access. Now you could do one company for streaming, and redbox for another.

I also seem to recall some idea for Blockbuster to do Redbox like kiosks, but streaming video and letting people walk away with them on customer provided flash memory instead of on discs.

Re:Pass the cost on and continue offering both (1)

h4rr4r (612664) | more than 3 years ago | (#34931290)

$1 per DVD?
I pay $20 per month for 3 at a time and go through probably 15 movies a month. No way would I pay another $1 per DVD. There is nearly no environmental factor, those mail trucks run with netflix or not.

Volume Comparison (5, Insightful)

Alanbly (1433229) | more than 3 years ago | (#34930858)

Yes, on a per-movie basis streaming is far cheaper but what's the difference in movies streamed per account versus movies rented via mail. I'd wager the average Netflix customer who doesn't stream consumes far fewer movies per month than the average streaming customer.

Re:Volume Comparison (1)

jedidiah (1196) | more than 3 years ago | (#34931086)

I figure it will only be a matter of time before the studios make it cheaper to send things by Snail Mail.

It's just in their nature to be greedy beyond sustainable levels and to squeeze their customer facing distributors (like movie theatres).

Re:Volume Comparison (1)

Kjella (173770) | more than 3 years ago | (#34931236)

Yes, but somebody wins when you cut costs. If you stream more movies, the customer gets more and is probably willing to pay more. Or you can create a limited streaming subscription for people that watch less than X hours with the same price but higher margins. Or lower the prices and make it up on volume. Or maybe it goes straight to Netflix's profits. Either way someone ends up better off (except the postal service).

Re:Volume Comparison (1)

Alanbly (1433229) | more than 3 years ago | (#34931282)

My only assertion is that the raw costs are misleading. I would guess that as of right now Netflix nets significantly more money per mail-based customer than per streaming customer.

War against Netflix (5, Informative)

GPLDAN (732269) | more than 3 years ago | (#34930890)

Content providers are at war with Netflix, and Netflix is differentiating Classes of Service depending on hardware used.

How I do I know? Same way you could know if you did the research. I have a Wii, a PS3 and Apple TV. Hook them up to a FastE hub, or a FastE switch that supports SPAN. Attach wireshark on a laptop.

Start the Netflix viewer on each device. Note that they each have different data centers that they reach out to. Always.

Traceroute to these IP addresses. Note that the Apple one in particular is congested at the last hop.

That is why the Netflix service sucks using the ATV2 unit.

So you have Netflix giving different hardware manufacturers different experiences - AND - you have bandwidth providers (mainly cable) trying to kill Netflix outright by rate shaping the traffic.

If I were Netflix, I wouldn't put those DVD burners on Ebay just yet...

Re:War against Netflix (1)

Cwix (1671282) | more than 3 years ago | (#34931006)

That would explain why streaming from my PS3 is so shitty compared to my computer.

Re:War against Netflix (1)

MyFirstNameIsPaul (1552283) | more than 3 years ago | (#34931198)

Streaming on my 360 is perfect. I really don't notice it.

Re:War against Netflix (1)

h4rr4r (612664) | more than 3 years ago | (#34931302)

Works fine on my PS3, but on all my computers is just says operating system not supported.

Re:War against Netflix (1)

bill_mcgonigle (4333) | more than 3 years ago | (#34931184)

you have bandwidth providers (mainly cable) trying to kill Netflix outright by rate shaping the traffic.

Oh, heck, my Roku can't even deal with Comcast's Powerboost. It sees the initial availability of high bandwidth to Netflix, tries to run at full quality, then once the buffer is exhausted finds it needs to re-buffer back to a lower quality.

I'd really really like to be able to tell it to just run at 3-dots quality all the time. Heck, I'd probably take 2-dots most of the time if the content wasn't visually striking for faster buffer loads. Instead, I need to plan to fill a minute doing something else while it gets its brain together when a movie starts.

Re:War against Netflix (1)

h4rr4r (612664) | more than 3 years ago | (#34931320)

The PS3 does this too, honestly the real problem is the cable providers nonsense. You can work around it by pausing as soon as the film starts then getting a drink or snack or talking to a human for a minute.

Re:War against Netflix (1)

matty619 (630957) | more than 3 years ago | (#34931218)

Interesting....but how would Netflix do this? Have you analyzed the DNS request coming from each device? Is each device requesting a different address? Because that's the easiest way they could do it, as Netflix isn't going to know anything about MAC addresses.

Re:War against Netflix (2)

DragonWriter (970822) | more than 3 years ago | (#34931276)

Content providers are at war with Netflix, and Netflix is differentiating Classes of Service depending on hardware used.

[...]

Start the Netflix viewer on each device. Note that they each have different data centers that they reach out to. Always.

That could be discrimination in class of service, it could be that they use platform-specific DRM systems on the user end, and that they support that with separate servers because its just easier to do that way.

Re:War against Netflix (1)

CmdrPorno (115048) | more than 3 years ago | (#34931306)

Were you viewing the same content on each device when you did this test?

I have seen an issue before where some content would barely stream, but other content would play fine in HD. Within a few hours, the problem disappeared. I assume that, at least some of the time, not all of the Netflix streaming library is available from the nearest/fastest location.

Re:War against Netflix (0)

Anonymous Coward | more than 3 years ago | (#34931412)

Content providers are at war with Netflix, and Netflix is differentiating Classes of Service depending on hardware used.

How I do I know? Same way you could know if you did the research. I have a Wii, a PS3 and Apple TV. Hook them up to a FastE hub, or a FastE switch that supports SPAN. Attach wireshark on a laptop.

Start the Netflix viewer on each device. Note that they each have different data centers that they reach out to. Always.

Traceroute to these IP addresses. Note that the Apple one in particular is congested at the last hop.

That is why the Netflix service sucks using the ATV2 unit.

I don't doubt your network analysis, but the Netflix app and streaming works flawlessly on my ATV2, iPhone, and iPad. Never an issue. I guess YMMV.

Now if only... (1)

DoofusOfDeath (636671) | more than 3 years ago | (#34930894)

Now if only they'd get Season 7 of "The Office".

I realize that's almost a complete non-sequiter. I just want to see Season 7, and I don't want to put up with Hulu's commercials.

Re:Now if only... (1)

Surt (22457) | more than 3 years ago | (#34931106)

Yeah, that's going to kill Hulu, I bet. The number of people who just aren't going to watch commercials with their content any more is going nowhere but up.

It blows my mind... (3, Insightful)

sideslash (1865434) | more than 3 years ago | (#34930906)

...that so many "A" titles are unavailable for streaming from any source (not just Netflix). C'mon, people, it's the 21st century. Put everything up there; I'll gladly pay a buck or two to rent what I want, whenever I want; and I think most adults have the same attitude (not necessarily a lot of Slashdot readers, but anyway).

Linux Streaming (0)

Anonymous Coward | more than 3 years ago | (#34930910)

If streaming is so much cheaper than shipping you would think they would be interested in making streaming available to us Linux users. I find it hard to believe they couldn't show a ROI on that significant of a cost differential. I know it would certainly cut down on the number of disks I receive every month.

Re:Linux Streaming (1)

Dan667 (564390) | more than 3 years ago | (#34931024)

hollywood fears linux and not very many people use it on the desktop. That said, I would love and use Netflix Streaming heavily on my MythTV box.

Re:Linux Streaming (1)

Andy Dodd (701) | more than 3 years ago | (#34931154)

Problem is, it is VERY difficult to implement content-provider-friendly DRM on Linux.

Content providers still insist on DRMing what they can, despite the fact that many of their delivery methods are known to be fully compromised. (They're dumbasses like that.)

I mean, who cares if Netflix streaming can be ripped when the higher-quality DVD is 100% compromised, and even Blu-Ray is compromised?

Re:Linux Streaming (1)

h4rr4r (612664) | more than 3 years ago | (#34931334)

and HDCP that the netflix stream will be played over is compromised.

It does not matter how fancy your DRM is when I can just record off the link.

Too bad In Canada (4, Informative)

future assassin (639396) | more than 3 years ago | (#34930930)

SHAW and ROGERS are pushing hard to penalize people for using services like Netflix with their new caps and $1-2 per gig for going over. CRTC+SHAW+ROGERS+BELL= Consumer shafting FTW!

Well then, they can pay up to 50 cents and.. (4, Insightful)

Maxo-Texas (864189) | more than 3 years ago | (#34930942)

pay for improvements to the backbone.

Linux distros and other filesharing will disappear by comparison.

This is the service that pays for the next internet upgrade.

I know I've gone from 28kbps up / 380kpbs down to 120kpbs (sometimes 180kpbs) up / 800kpbs down on comcast in houston.

The capacity is there.

I regret not getting Netflix sooner but they seem to have exploded recently-- at least 20 new series and a hundred new movies seem to be added weekly. I'm now 450 hours behind on viewing and I haven't even added Lost yet.

This is the "cable TV" killer. Cable TV will have to lower rates from $10 a month.

And Columbo from the 1980's is just as entertaining. Watched a great Danny Kaye film last night.

There is a huge oversupply of entertainment-- it's time for the prices to start coming down!

Re:Well then, they can pay up to 50 cents and.. (1)

dunezone (899268) | more than 3 years ago | (#34931110)

...and a hundred new movies seem to be added weekly.

Don't get me wrong, I love watching bad movies. But of those 100 added every week maybe 2 or 3 are decent and everything else is terrible or B-Movie.

Re:Well then, they can pay up to 50 cents and.. (1)

BrianRoach (614397) | more than 3 years ago | (#34931210)

No, it's not the "cable TV killer" because in most cases, that's who is providing the broadband pipe. And when it's not ... it's the phone company, which may also be selling you "cable" (See: Verizon FIOS) and/or "on-demand" content.

This is why Comcast wants to double-dip and change you AND Netflix for your internet connection. Without government regulation it will never be cheaper to stream the same content available from the last-mile provider; the last-mile provider will prevent that from occurring.

Re:Well then, they can pay up to 50 cents and.. (1)

h4rr4r (612664) | more than 3 years ago | (#34931346)

kpbs = kilo per bit second?

Also 800 kbps would also be too slow to watch netflix. That is only 100 KBps.

Sure, but the USPS doesn't have caps (4, Insightful)

jaymz666 (34050) | more than 3 years ago | (#34930948)

Since it uses 2 or so GB per HD movie streamed, your comcast caps will be pushed. The USPS hasn't called me up saying I have used too much mail.

Re:Sure, but the USPS doesn't have caps (1)

GiveBenADollar (1722738) | more than 3 years ago | (#34931118)

Yeah but the latency sucks. I'm still waiting to re-spawn using IPoAC to play CSS and it's been 2 weeks. I only use my wired connection for slashdot.

Re:Sure, but the USPS doesn't have caps (0)

Anonymous Coward | more than 3 years ago | (#34931226)

You're paying per oz to send physical mail...

You're not paying per GB for what you're downloading...

Re:Sure, but the USPS doesn't have caps (3, Insightful)

tgd (2822) | more than 3 years ago | (#34931396)

Comcast's caps are (soft) 250GB.

At 2GB per movie streamed (and in my experience its less than half that), that's 125 movies.

A month.

Four a day.

Hmm. (1)

seebs (15766) | more than 3 years ago | (#34930954)

2M DVDs per day, ~300 shipping days per year (assume they don't ship on Sundays or holidays), that's about $600M.

But how on earth do we conclude that they spend "more" on shipping than they do on streaming? Do we have a number for how many movies they stream? I don't.

Oil companies aren't going to like that. (1)

h00manist (800926) | more than 3 years ago | (#34930962)

But if they act quick maybe they can run some fiber along their pipelines. Oh, wait...

circuit costs ?? (0)

Anonymous Coward | more than 3 years ago | (#34930970)

how much are their circuit costs? 2,000,000 x 4.4GB per DVD.. ? fairly substantial bandwidth & server costs, too.

Re:circuit costs ?? (1)

alen (225700) | more than 3 years ago | (#34931362)

the content is hosted by level 3. it's not like netflix has a data center streaming content from one location

If I subscribe to Netflix... (1)

operagost (62405) | more than 3 years ago | (#34930986)

... will they stop their garbage pop-unders on every other site I visit?

Re:If I subscribe to Netflix... (1)

Surt (22457) | more than 3 years ago | (#34931124)

You should really invest the $0 an ad-blocker will cost you.

Bit rate/resolution (1)

sixsixtysix (1110135) | more than 3 years ago | (#34930996)

Until their streaming can match the bit rate & resolution of the physical format, this will be true. Once they start doinxg full hd, and not the garbage they have, with multiple selectable dts-hd tracks, let's see the cost ratio. Their current best HD stuff looks worse than the worst cable or satellite compression.

what about comcast? (2)

hymie! (95907) | more than 3 years ago | (#34931002)

Netflix currently pays up to $1 per DVD mailed round trip, and the company mails about 2 million DVDs per day. By comparison, the company pays 5 cents to stream the same movie.

Does this figure reflect the $20million Comcast payoff?

Look at the overall cost of transport... (1)

HockeyPuck (141947) | more than 3 years ago | (#34931068)

When netflix ships a DVD, they pay $1 and nobody else pays. I don't pay to receive the DVD at my house.

When you stream a DVD, not only does netflix have to pay for bandwidth (akin to the $1 / movie with physical shipping), but the receiver has to pay for bandwidth to receive it as well. I don't have to pay for my mailbox, however, you could say that I have to pay rent/mortgage.

It's also cheaper b/c with streaming none of the bandwidth is dedicated to a specific user but is applied to all users. Whereas the mailed DVD, the $1 is specific to me.

Re:Look at the overall cost of transport... (1)

Arlet (29997) | more than 3 years ago | (#34931150)

The marginal cost of receiving data is often zero.

Re:Look at the overall cost of transport... (1)

Junta (36770) | more than 3 years ago | (#34931394)

Since netflix doesn't do a shipping surcharge per disk, the shipping is no more dedicated to a specific user than streaming. AFAIK, they do unicast streaming, so each concurrent user is getting dedicated throughput.

The Nextflix Effect (1)

surfer10s (1353747) | more than 3 years ago | (#34931070)

Can't wait for the Netflix effect. The company goes full streaming and Postage rates jump by 3%.

Or, as Tanenbaum might say... (1)

Arlet (29997) | more than 3 years ago | (#34931076)

Never underestimate the cost of a station wagon full of tapes hurtling down the highway.

Is there a Slashdot category for "Duh"? (2)

Shoten (260439) | more than 3 years ago | (#34931092)

Of course it's cheaper. Netflix is just the latest to reap the benefits of cheaper delivery via digital means. Just as email is cheaper than snail-mail, spam is cheaper (unfortunately) to send than promotional mailers, Craigslist is cheaper to post on than putting flyers up in a neighborhood...it's even cheaper to use virtual tape drives for backup, and digitally replicate the backups over WAN links than it is to send tapes via UPS, overall. The examples of this seem endless, and there are many reasons why it happens that way.

All Netflix had to do was wait out Blockbuster.... (1)

i_want_you_to_throw_ (559379) | more than 3 years ago | (#34931104)

and bide their time in general to take advantage of what was inevitable: streaming media. Now that broadband is ubiquitous, it's the next evolution in watching movies. I just wish they had their ENTIRE library on line. It's going to be interesting to see if the demise of Netflix's meatspace delivery will bump up the values of Coinstar, owner of Redbox.

More simple math: only 19x more (1)

noidentity (188756) | more than 3 years ago | (#34931128)

Netflix currently pays up to $1 per DVD mailed round trip, and the company mails about 2 million DVDs per day. By comparison, the company pays 5 cents to stream the same movie. In other words, the company pays 20 times more in postage per movie than it does in bandwidth. Doing some simple math [...]

$1.00 - $0.05 = $0.95 more per DVD. $0.95 / $0.05 = 19 times more per DVD. QED

Everyone else charges $4-$5 for current VOD movies (1)

billrp (1530055) | more than 3 years ago | (#34931132)

Amazon, Comcast, Fios charge big bucks for video on demand recent movies - there's no way Netflix can provide their unlimited streaming on current titles for just $10-$15/month. But maybe Netflix and studios can get creative, like Netflix buys a fixed number of streamable recent movies, and you just add a request to your streaming queue like for DVDs, and when a streamable movie becomes available then you get to watch it within the next 12 hours. (Wait, this sounds patentable)

kill the goose that laid the golden egg (1)

jollyreaper (513215) | more than 3 years ago | (#34931160)

Netflix got a sweetheart deal on a lot of the content streaming. There's talk that the content providers want a far bigger cut the next go around.

Netflix created a market for them that they didn't even realize was possible and now they're bitching about not getting a big enough cut. I like that Amazon is funding their own studio. Create better content and to hell with the studios.

Too bad their streaming options are limited (1)

grasshoppa (657393) | more than 3 years ago | (#34931208)

At least for what I'm looking for. Every now and then I figure, "Hey! I'll watch X! I've got a couple hours, why not?" And of course, you can't stream X. Happens a couple times a week to me.

Of course, then there's the case of the missing series in my instant queue. I had farscape on there, checked back in Dec...it had been moved to disk only. Crappy and annoying. Then it reappeared in my instant queue in January. No explanation.

I love the entire idea of streaming movies, but they need to get things more robust and reliable.

I would like to see local caching (2)

Marrow (195242) | more than 3 years ago | (#34931264)

Streaming has a lot of downsides for me. Its really bad at fast-forward / rewind. It does not support subtitles. Extra DVD features are not present. So I like DVDs better. That said, they could get around some of these issues by caching the content at my house. If I put movies into my streaming queue, the content should begin downloading to my home right then, and not wait until I want to watch it. Sort of like a dvr with remote PUSH capability. Also if I an my neighbour add the same movie, then we should be able to help each others caching. And your netflix devices should just grab local cached data instead of streaming it from the internet. Doing it this way, the downloads could be done slowly, some could be done at night in off hours. And same-subnet boxes could scatter-gather the content to be even more efficient. The local cache would make the FF/RW perform much better. And extra features could be added as extra chapters that you can skip to.

I would be ready to drop cable TV completely, if.. (1)

matty619 (630957) | more than 3 years ago | (#34931350)

Netflix could figure out a deal to add cable TV channels available for live streaming a la carte. I would need a couple cable news channels, a few discovery channels, comedy central, and one or two others I'm forgetting perhaps. At $3-$5 each per month, I would still come out ahead of where I am now with my current basic cable w/ HD DVR. Make that happen, and cable TV would be on a fast downward spiral. Seems like the smaller cable TV stations would like that, as they wouldn't have to fight to get added to the lineup, just get enough money together to build whatever it is that a cable TV channel needs these days, do a little advertising, and if ppl want it, they'll subscribe directly. Cut out the middleman. I can't wait! :)

Where's the content? (1)

adenied (120700) | more than 3 years ago | (#34931364)

I noticed yesterday that I have 154 movies or TV series in my Instant queue that are "saved". This means that they were once available to view but now aren't. Sure some of these are Stars releases that are only available for a limited time. But if even half of them are just things that Netflix had the rights to stream but has now lost that's really pathetic. As long as this continues and the only things available to stream are a very small percentage of their library, any of which might disappear with very little notice, there's no way they can do anything but spend the money to ship DVDs. They just raised their rates about 15% a couple months ago. I'm still paying because I don't know of a better legal option and I'm still holding out hope that the streaming situation will improve "sometime soon".

Who is to blame for that? (1)

assertation (1255714) | more than 3 years ago | (#34931392)

I would gladly watch streaming movies with my Netflix account, but Netflix doesn't support my operating system, Linux.

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