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.