Okay so how do these guys (NetFlix) make any money? - Canadian TV, Computing and Home Theatre Forums

hugh · 2002-06-20, 12:49 PM

so I'm reading this article about Netflix that rents DVD's via mail.

Netflix charges customers $19.95 per month for a subscription that allows them to choose movies online and have them shipped out via first-class mail. Subscribers return the DVDs using enclosed mailers. There are no late fees. Customers can rent as many movies as they want during a month but can only have three movies out at a given time.

Apparently they went IPO last month and raised 82.5 million US.

How do you make money, I mean shipping the DVD's back and forth has gotta cost a fair bit of dough. What am I missing?

james99 · 2002-06-20, 01:18 PM

I'm sure they have a nice volume discount with whatever shipper they use. Volume. Volume. Volume.

hugh · 2002-06-20, 01:53 PM

Quote:

I'm sure they have a nice volume discount

Yes, I'm sure they do but if someone gets a movie every week, that's at least eight shipments a month (four times there and back). Plus all the admin and handling. hmmm

reminds me of the old expression, "we lose a penny on each sale but we'll make it up on volume!"

Edival · 2002-06-20, 02:37 PM

Chances are a good deal of customers don't rent more than like 3 a month so don't use the full $20 worth each month.

squigly1 · 2002-06-20, 02:43 PM

Well, Hollywood likes the idea and has a small stake in it. Here is a story.

http://money.cnn.com/2002/03/11/comm...ine/lashinsky/

james99 · 2002-06-20, 02:58 PM

Didn't Hollywood also like DIVX ?

2002-06-20, 12:49 PM	#1
hugh Member #1 Join Date: Dec 2001 Location: Toronto Posts: 47,492	Okay so how do these guys (NetFlix) make any money? so I'm reading this article about Netflix that rents DVD's via mail. Netflix charges customers $19.95 per month for a subscription that allows them to choose movies online and have them shipped out via first-class mail. Subscribers return the DVDs using enclosed mailers. There are no late fees. Customers can rent as many movies as they want during a month but can only have three movies out at a given time. Apparently they went IPO last month and raised 82.5 million US. How do you make money, I mean shipping the DVD's back and forth has gotta cost a fair bit of dough. What am I missing?

2002-06-20, 02:43 PM	#5
squigly1 Join Date: Jan 2002 Location: Toronto Posts: 378	Well, Hollywood likes the idea and has a small stake in it. Here is a story. http://money.cnn.com/2002/03/11/comm...ine/lashinsky/ __________________ Squigly1

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2002-06-20, 01:18 PM	#2
james99 Moderator Join Date: Mar 2002 Location: Burlington Posts: 24,791	I'm sure they have a nice volume discount with whatever shipper they use. Volume. Volume. Volume.

2002-06-20, 02:37 PM	#4
Edival Join Date: Jun 2002 Location: Calgary Posts: 146	Chances are a good deal of customers don't rent more than like 3 a month so don't use the full $20 worth each month.

2002-06-20, 02:58 PM	#6
james99 Moderator Join Date: Mar 2002 Location: Burlington Posts: 24,791	Didn't Hollywood also like DIVX ?