Netflix (NFLX 3.55%) is focusing on digital video services while the DVD-shipping business is left to wither on the vine. But the domestic streaming segment delivers operating margins of just 18.5% vs. the DVD business sitting pretty at 50.1%. Is management certifiably insane for chasing growth in a far less profitable market?
In this video, Anders Bylund will explain why the streaming strategy makes sense. It's a riveting story of dueling business models: fixed costs vs. fixed margins. Watch his take, then drop down to the comments box to share your own views on the subject.