SJ Mercury News: Netflix – customer satisfaction and business model?

A report on how long some Netflix subscribers have to wait to get hot titles — and on how the company is dealing with the situation by promoting older flicks.

Under revenue-sharing agreements with most of the top studios, Netflix pays on average $1.40 to the studios each time a new release is mailed to a Netflix user, about 40 cents more than Blockbuster, the nation’s largest brick-and-mortar video rental chain. Revenue-sharing costs now are equivalent to nearly 20 percent of Netflix’s subscription revenue.

Sure seems like Blockbuster (presumably because of scale) has a built-in advantage in its cost structure that could be used to compete effectively with Netflix.

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