Netflix Pays Studios More without Raising Cost to Consumers

Filed in Gather Business News Channel by on July 29, 2010 0 Comments

In the most recent quarter, Netflix reported paying $66 million to studios for streaming content, compared to $9 million in the same period of last year.  Some analysts believe that this number will continue to rise, according to CNET.

Netflix has done this without raising costs to the consumer, keeping its subscription costs the same.  Netflix has been able to do this by trading costs.  The company has spent less on physical discs in the first half of 2010, as it has seen its subscribers turn more to its streaming service.  In turn, this allows the company to cut postage costs.

The company has done more than just used money to bring streaming content.  Netflix agreed to delay the rental of new releases of Warner Brothers studio content in January.  In return, Warner Brothers granted Netflix more access to its film catalog for streaming.

Netflix has been opening its streaming service to more and more subscribers.  Instead of having to watch movies on a computers, more consumers are able to watch content through a Roku box, a game console (Wii, PS3, Xbox 360), or another set top box solution.  In fact, Netflix reports that more and more subscribers are watching streaming content.  The company is expected to reach 20 million subscribers sometime in the next year.  This rivals cable giant Comcast.

Personally, I find that the streaming service is convenient.  Being able to get content straight to my television as I want it is something that makes the Netflix service worth it. It’s much faster than the two day turnaround of the disc service, and it’s nice to be able to watch more than one film or disc worth of a television show in a day.

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