I always assumed it was from people like me who go through feat and famine periods with them. Right now we give them $14/month, or whatever, and probably get 12-15 discs per month. For awhile though, we gave them that same amount of money every month and just hung onto the same three DVDs, never watching or returning. That made our account almost 100% profit for that period of time. There are probably plenty of people out there who pay for the service but don't use it to its fullest extent. And those people in the highest service tiers-- how many movies can you possibly watch a month? 28? That's if you do one every day. So they're paying for 18 out at a time and maybe using half of what they could get for a month, which is more profit for Netflix.
I also think they've probably got some serious bulk mail and volume distributor discounts. And they sell used discs, plus the insides of the sleeves are covered in ads, and that's probably a good amount of money there.
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timeasmymeasure
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Date: 2007-10-26 03:38 pm (UTC)I also think they've probably got some serious bulk mail and volume distributor discounts. And they sell used discs, plus the insides of the sleeves are covered in ads, and that's probably a good amount of money there.