Netflix Spends 20 Times More to Mail a DVD than Stream to It
Over at Digital Society they have done a little math based on recent statements from Netflix chief content officer Ted Sarandos. The numbers they looked at tell us how much Netflix spends to get video content in front of your eyeballs. It turns out, that it costs the company 20 times more to mail you a disc, than it costs to stream the content to you. No wonder they're pushing for a streaming-only model.
Netflix is currently spending about $1 round trip to mail you a DVD movie. Streaming that same content to your connected device only cists them 5 cents in bandwidth. With over 2 million discs going out each year, that comes out to about $700 million spent every year on postage. This is why the higher license fees for streaming content make sense for Netflix. The cost of delivering the content is so much lower, the company can still make a killing.
We understand that the streaming options are less than perfect much of the time, but Netflix seems to be working to change that. With numbers like these, we expect they are trying very, very hard.

Comments
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praack
January 19, 2011 at 7:17am
200 backlog on dvd and streaming is 5, most are foreign titles or newer US ones that are not available streaming - or are only available Dubbed
even with 2 disks at a time the turnaround is not quick enough........
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ebeale
January 19, 2011 at 6:19am
I received a disk this weekend and after the movie I wanted to watch some of the extras. When I tried to access them I received a message stating this was a rental disk and I would need to purchase the movie if I wanted the extra features. I feel this is another way the movie industry and Netflix are making deals that only benefit themselves. The disk marked as rentals seemed to have started last year. I thought that since it now takes additional month before new movies are released on Netflix they were going to offer more recently released movies via streaming. I have yet to see a new popular new release become available this way.
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PCLinuxguy
January 18, 2011 at 11:03pm
I agree that if much more of their library was available in streaming that it'd be alot easier to catch than the discs. Sometimes it's easier to watch a dvd than stream, especially if internet is an issue (like low speeds, bad isp, down for maintenance etc) I don't feel they need to cut off dvds but if they allowed linux machines (desktops, not just boxes like Roku and Boxee) to stream as well, it'd help their business, as with the aforementioned larger content library available on stream versus disc only.
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raptorspike
January 18, 2011 at 10:40pm
I currently have a backlog of 20 movies VOBs from Netflix discs that I haven't had the time to watch. If these mostly popular movies were available for streaming, i would have probably watched them already. If Netflix were to get more of their catalog on their instant viewing catalog, I would consider a streaming only setup. But until then, I need the discs
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Ruins
January 18, 2011 at 10:00pm
streaming is useless for me, due to very slow dsl (1.2 mps) that Qwest provides in my neighborhood. I dropped netflix and added premium channels for movies with my Directv account.
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gothliciouz
January 18, 2011 at 7:52pm
not cool at all..if they drop discs i'm gonna say bye bye netflix, btw anyone knows any other alternative?
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n0b0dykn0ws
January 19, 2011 at 8:16am
I tried BlockBuster online, but even if the company survives I wouldn't use it.
The website/search function is horrible.
It takes twice as long for a disc to arrive Vs Netflix.
However, if you also want to rent disc based games the same way, it's not that bad.
n0b0dykn0ws
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Iowa_State_Cyclone
January 18, 2011 at 7:20pm
As a current netflix subscriber, I will drop their service if they switch to streaming only. I agree with everyone else that the quality is mediocre at best. Also, it's nice to have the physical media as we travel quite often and it's nice to have the disc for the kids to watch in the car.
Also, as more and more ISPs add bandwidth caps, I don't see a streaming only company as a viable option. I personally am fortunate my ISP does not have a cap, but almost all of my friends do and from what they've told me, steaming netflix a lot uses quite a bit of their monthly usage.
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cpuking2010
January 18, 2011 at 7:52pm
I to will stop once they go "stream only" their streaming selection is not even worth $4 a month. However you should worry less about data caps, as time goes on and networks build better er networks they'll have less of a reason to bust a cap in yo A$$!
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sinan
January 18, 2011 at 7:53pm
The math would add up, but 2 million discs a day is a massive number, even for Netflix, so I question the accuracy of it. Maybe streamed content is included in that number?
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nmanguy
January 19, 2011 at 12:40am
They have at least 10 million subscribers, so 2 million a day is pretty low. I mean, I do one disc at a time, and only watch 4-5 discs a month. A lot more people have 3 or what have you. So if we said the average subscriber watched 1.5 discs a week, that would already be 15 million/week, or 2.1 million a day.
Except now I think they're up to like 13 million or something.
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williezzy
January 18, 2011 at 4:33pm
Is it just me or should the title be "Netflix Spends 20 Times More to Mail a DVD than to Stream It" instead of "Netflix Spends 20 Times More to Mail a DVD than Stream to It"?
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sotoa
January 18, 2011 at 3:30pm
I really wish they'd get more current with their selection of streaming content. Browsing through their selections reminds me of walking down the "old" aisle of the Video Cassette Rental Store.
At least their STARS channel offers somewhat premium movies once and a while. But the streaming quality is less than DVD quality for sure. I see artifacts that are worse on the STARS selection than the regular Netflix selection. It's like STARS is forcing Netflix to push the bad quality from fear that someone might copy the movie.
I want near Blu-Ray quality (if not actual) and I want the movies to be streamed at least 6 months after release.
I'm kinda liking the VUDU idea actually. Super clear streaming.
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cpuking2010
January 18, 2011 at 7:55pm
In Fear of people cancleing their cable or satalite subs, which they make alot more money from then netflix content. you wanna see HD you watch regualr tv.
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Zachary K.
January 18, 2011 at 3:10pm
not being able to stream all movies is THE reason i dropped netflix.
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sinan
January 18, 2011 at 2:55pm
I'm no math wiz or anything. But If they mail out 2 million discs and it costs $1 for each wouldn't that equal $2 million? Not sure how you got $700 million. I wouldn't want you doing my taxes. :)
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n0b0dykn0ws
January 18, 2011 at 2:39pm
When they can get me blu-ray quality streams, then I'll switch to streaming only.
Hell, their 'HD' streams are only nearly equal to DVD quality, and that's the video side only.
That is why it only costs them $0.05 to stream me a movie.
So what are they going to do when all the ISPs start shaping Netflix traffic unless Netflix ponies up?
n0b0dykn0ws
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Maningreen
January 18, 2011 at 6:25pm
I've seen their (NetFlix) streaming on a big screen HD TV and it's not all that great. The quality is that of VCR. I'd rather watch a DVD instead of streaming. If streaming can be perfected to give the same quality as Blu-Ray then I'll switch to streaming. For now it's in it's infancy and too early to hail it as a DVD/Blu-Ray Disc killer.
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