Though its content acquisition costs are high and getting higher, Netflix has been able to drop one significant expense recently: streaming costs. The company has managed to drop its cost to stream video by 50% since 2009 because of more competitive bandwidth pricing.
According to Frost & Sullivan analyst Dan Rayburn, Netflix’s cost to stream two hours of standard-definition video has decreased from around 5 cents to 2.5 cents. An interesting comparison is the fact that it costs the company about 78 cents for round-trip shipping for each DVD it mails out. It’s little wonder the company is pushing its customers towards streaming as quickly as possible.
Rayburn thinks that Netflix doesn’t have anything to worry about regarding the bandwidth caps that some internet service providers are placing on consumers. Says Rayburn:
“[Bandwidth] caps from Comcast or AT&T won’t have any material impact on Netflix now or anytime in the near future . . . Years from now they could, if the ISPs don’t raise their cap levels, but right now caps are not a big deal to Netflix.”
Have any of you run afoul of your ISP’s bandwidth caps with your Netflix streaming, Insiders? Is Rayburn right to be so confident about such caps’ lack of influence on Netflix given the rapidly rising amount of bandwidth the service is using?
(via Home Media Magazine)
Perhaps bandwidth caps might not be an issue, but throttling might be.
at 78 cents * 30 per month they are losing money on us. i calculate $23 costs!
screw downloads, never happen for us. we will never accept any service
that doesn’t ORIGINATE from a box 3 ft from our tv!!! NO dropouts, high quality, very little compression REQUIRED!
that was the promise of dvds, blurays now much better,
streaming is BS, verizon comcast directv all the same = BS
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Rayburn is full of hooey. I know people who have already run into bandwidth problems from Comcast. Throttling is a problem and “overuse fees” will be right behind.
For us rural customers streaming is a no go. The only available internet broadband available to us is satellite. Wildblue Satellite caps downloads at 13GB per month. Does not take much video streaming to reach that.
Streaming quality also stinks. What about closed captioning and multiple languages?
I think he is right. Comcast sets a cap @ 250GB’s and I stream videos, playgames ps3, and have tivo that connects and download info daily and never get close to that cap. People hitting that cap must have multiple devices going at once.
I have to agree. We have AT&T and I’m sure there’s a cap, but we can stream on 3 different computers at the same time and everything works fine. Mind you, we usually don’t do that, but I was curious if we would have a problem so we tried it out.
Basically what happens is after you’ve downloaded and uploaded a certain amount of data (greg says 250gb) the company will cap your speed. so try 3 computers streaming in the beginning of the month, then download a ton of torrents or something to hit 250 (really quite a lot of stuff) then try again.
I rent 26 movies a month on the 24.95 plan. My family streams about 15 hours a week. I would say the Netflix is the best deal in town. I would love to see new releases streamed. I am disappointed with video/audio quality. I hope that improves in the future as well as newer titles. Until then I will stick with the physical disc.
As a disabled person, I spend a lot of time watching Netflix that is streamed through my PS3. I’m unable to watch Netflix as often as I want, because I will easily exceed Comcast’s 250gb cap.
Comcast’s cap has made me decide to cancel Netflix as I cannot watch it unlimited as I want.
“[Bandwidth] caps from Comcast or AT&T won’t have any material impact on Netflix now or anytime in the near future”
Well, they’ve already lost Netflix a customer, so I would say they’ve had an impact. Think again, Netflix.