Can Netflix make money?

[KenK]

Several months ago, some were talking about Netflix stock, and Blockbusters Internet Service

I saw the post below, and read an article in the business section. It was about Netflix and postage.

There is a special at Netflix for $9.99 a month for one DVD at a time....first month free. They seem to be sending us 2 DVDs a week, if we send one back on Sat PM, the next comes on Monday....send back...next comes on Thr or Friday.

According to the article, the postage R/T first class to Netflix is .78 cents per DVD. If I keep getting two a week - twice a week (and they don't start stalling)....thats $1.56 a week, four weeks in a month is over $6.00 a month just for postage.

I don't see how much $$$ can be made unless they have tons of members, and a very cost efficient operation. {And must stall shipments after awhile}

Would this simplistic view raise anyones concern over buying the stock?

 

[glenn1000]

It's like a health club. There are some that go all the time but lots of members who use the service much less. When we signed up with Netflix we turned over movies at a fast pace, but now we may keep a movie 2-3 weeks or longer. It's still worth the convenience, but I'll bet many members are like us and that's how they make a profit.

 

[Gadabout]

It's like a health club. There are some that go all the time but lots of members who use the service much less. When we signed up with Netflix we turned over movies at a fast pace, but now we may keep a movie 2-3 weeks or longer. It's still worth the convenience, but I'll bet many members are like us and that's how they make a profit.

I don't feel it's worth it unless we're watching at least 3 movies a week. I have been known to reorganize our queue when certain people are not watching their movies in a timely fashion....(but sshhh! don't tell them)

If I know that I will be going someplace with a DVD player (or we have the computer along), I will take a DVD with me, watch it during some downtime, and mail it off from wherever--the envelope says "Nearest Netflix Facility", and I've gotten many DVDs from all over the country, not just our closest one.

To me, there are only two advantages to going to the video store over Netflix:

1): If you actually want to watch videotaped movies--there are lots of movies/shows that have never been put on DVD, and as owners continue to get greedy about licensing fees, it doesn't look like some of those will ever make it to DVD.

2): If you want to do a big "theme night/weekend" rental on the spur of the moment--say all Horror movies, or Sci-Fi, or whatever.

 

[vacation_time]

Netflix "throttles" frequent renters...

http://www.chron.com/disp/story.mpl/business/3656905.html

 

[michelle]

It's like a health club. There are some that go all the time but lots of members who use the service much less. When we signed up with Netflix we turned over movies at a fast pace, but now we may keep a movie 2-3 weeks or longer. It's still worth the convenience, but I'll bet many members are like us and that's how they make a profit.

Agreed. We are with Blockbuster and used them a lot more in the beginning. Now, it is probably not the best way to spend our money, but for the convenience of always having a few movies of choice at hand, we are still happy with what we are getting for our money. I am sure we are part of the majority.

 

[Gadabout]

Well, lawsuits don't help the bottom line either--and it was their own fault. Here's a thread on how they got in trouble on their proposed settlement.

http://www.tugbbs.com/forums/showthread.php?t=18550

 

[isisdave]

Gadabout, have you tried using more than one queue? If you are on the more-than-one-at-a-time plan, you can have more than one queue and movies come from them separately (when you return one from queue A you get the next movie in queue A). That way, when someone keeps "Dumber and Dumbest" for three weeks, someone else doesn't have to wait for "The Forsyte Saga." Also, there isn't such pressure to keep pushing newly released movies up higher in the queue.

 

[Cat]

There was just an in depth profile of Netflix on Sixty Minutes this past Sunday. They told about the owner/founder and how he came up with the idea and operated it out of his house to start.

They did mention that because of Netflix's sorting equipment for its mailers that they get discounted postage. That has to help.

But they also mentioned that the very real likelihood of DVDs becoming obsolete as downloadable movies become more prevalent spells an uncertain future for the company.