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Netflix, Inc. Message Board

  • lifesweetingreencountry lifesweetingreencountry Jul 26, 2013 6:59 AM Flag

    The Big Picture

    When Netflix was moving to streaming they made a high risk decision. Their streaming service would be a quantity value proposition - a huge library of older films and TV shows at a fixed price of just $7.99/mo. They would grow streaming by adding original content and more older shows to their 'one price for everything' library.

    They were between a rock and a hard place. They couldn't go after what was obviously a huge attractive market - streaming more current movies. To do so would knock the legs out from under their profitable DVD rental cash flow.

    That decision left a lot of money on the table. Little Coinstar's DVD kiosks of newer movies earn four times what Netflix does.

    Amazon and former Coinstar/Verizon are moving to take the current movie streaming market using a different concept - PPV. PPV is the only way to make high demand movies affordable on the streaming public. Since the DVD rental market is established, they know the demand is there.

    Now Netflix slowly loses its DVD rental base. IMO banking on original content (which assumes that a DVD rental company could compete artistically) was desperation. It better work. If it doesn't companies offering a library PLUS current movie PPV streamng will destroy them.

    It is a very interesting case study.

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