Who am I to look a gift 10% discount in the mouth?
Days after Netflix (Nasdaq: NFLX ) sent me its online streaming disc for Wii consoles, I got an interesting nudge from the flick flicker.
Connecting your Wii console to your Netflix account is easy. Insert your Netflix instant streaming disc in your Wii console and follow the instructions on your TV screen. Start watching TV episodes and movies! We'll automatically apply your 10% discount to your next month.
--Your friends at Netflix
I received the promotional email on Thursday night, just two days after receiving the disc that I was waiting until the weekend to install.
It's an interesting strategy. Receiving a one-time 10% price break amounts to a mere $1.70 on the popular Netflix plan that allows unlimited DVD rentals with three discs out at any given time. However, streaming is included in the smorgasbord, and Netflix is right in promoting the offering.
It's clearly cheaper for Netflix to pay Akamai's (Nasdaq: AKAM ) discounted streaming rates than to mail out an optical disc both ways. There are also inventory, distribution center handling, and disc damage to consider with the physical product. If I lean on fewer DVDs because I'm streaming more, I just became a more margin-friendly subscriber!
It's also about building its lead. No one else is really following Netflix's model. Coinstar's (Nasdaq: CSTR ) Redbox is reportedly surveying its thrifty renters to gauge their appetite for an unlimited streaming service, but how long will it take to build the streaming library and relationships with hardware makers to stream directly to couch potatoes?
Amazon.com (Nasdaq: AMZN ) , Apple (Nasdaq: AAPL ) , and Blockbuster (NYSE: BBI ) are incredulously ignoring this market. They all serve up celluloid in digital form, but only on a piecemeal basis. Even if Netflix's streams aren't the hottest or newest releases it's a value proposition that is difficult to ignore. More of the market will realize this when Netflix delivers what should be yet another quarter of healthy subscriber growth on Wednesday.
So watch Netflix as it continues to pad its eventually insurmountable lead in this space. This may be the smartest $1.70 that Netflix ever spent on its subscriber base.
Is there any Wi-Fi capable streaming device that Netflix won't be available through in a year or two? Share your thoughts in the comment box below?