Netflix Is Paying Me to Stream

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.

Dear Rick,

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?

Akamai Technologies is a Motley Fool Rule Breakers pick. Apple, Amazon.com, and Netflix are Motley Fool Stock Advisor selections. Try any of our Foolish newsletter services, free for 30 days.

Longtime Fool contributor Rick Munarriz has been a Netflix shareholder -- and subscriber -- since 2002. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


Read/Post Comments (7) | Recommend This Article (17)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 19, 2010, at 10:57 AM, badazzz65 wrote:

    your are a eroneous NETFLIX pumper writing false statements. BLOCKBUSTER is offering streaming video as well NOT JUST NETFLIX as you suggest. YOU SHOULD BE SUED!!!

  • Report this Comment On April 19, 2010, at 12:47 PM, BioBat wrote:

    Blockbuster is offering streaming content but it's not tied into an unlimited rental plan and it's not available on nearly every media player currently on the market. It's also competing in price with OnDemand offerings from cable companies making it difficult to actually stand above the competition.

  • Report this Comment On April 19, 2010, at 12:48 PM, BioBat wrote:

    Blockbuster is offering streaming content but it's not tied into an unlimited rental plan and it's not available on nearly every media player currently on the market. It's also competing in price with OnDemand offerings from cable companies making it difficult to actually stand above the competition.

  • Report this Comment On April 19, 2010, at 2:26 PM, mistrrob wrote:

    Blockbuster is merely being counteractive when it really needs to be innovative to survive. Sure, it has cut some deals with the movie industry, but at what cost? I'm certain that the movie industry would not entertain the thought of cutting a deal which causes it to make less or even lose profits. Meaning the costs will either be incurred by the consumer or blockbuster. Blockbuster has been creating stories of grandeur, with recent headlines, but postpones its shareholder meeting? Let's get serious here, one month ago they threaten bankruptcy, and besides making bubbles in an already dirty bathtub, all of a sudden have a chance? The share buyers are without a doubt, keeping it alive and stand to lose a fortune.

    By the way, I do not subscribe to either Netflix or Blockbuster.

  • Report this Comment On April 19, 2010, at 2:55 PM, FoxValley2012 wrote:

    badazzz65, realax pal. The author didn't say Netflix was the ONLY one for streaming. It said "They all serve up celluloid in digital form".

    Netflix's offerings are different and cost effective. I have a Roku box and can access my Netflix account and Amazon streaming. There are many titles I have to PAY for on Amazon, that I get included in my Netflix membership--plus I can get a DVD by mail with Netflix with my "free" streaming.

    Nobody is coming close to Netflix with new release DVDs and streaming for $9 a month.

  • Report this Comment On April 19, 2010, at 7:09 PM, TMFBreakerRick wrote:

    badazzzz65, where is the error?

    "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."

    Blockbuster is in digital delivery, but only on a piecemeal -- a la carte, pay per view, etc. -- basis. Comcast and HBO (via HBO Go) have streaming, but only as part of their costlier subscription packages.

  • Report this Comment On April 19, 2010, at 7:14 PM, SUPERMANSTOCKS wrote:

    I BOUGHT BBI ToDAY :) That is my answer to Netflix

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1156701, ~/Articles/ArticleHandler.aspx, 9/20/2014 2:07:08 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement