Comment This only considers 1/2 the costs involved (Score 1) 473
Yes physical DVDs are much more expensive than bits to get to my house. That isn't really surprising is it?
Now consider the licensing fees. Netflix can buy a DVD from Walmart for $16 and send it to 100s of people at year. They don't need to give the movie industry any more money than their share of that $16. Yes Neflix has to buy 10,000 copies, but still we are only talking $160,000 of money up front to distribute the movie.
Now what to take a guess how much Netflix pays to license a movie for streaming? Guess what, it is more than $160,000. A lot more. Like 100 TIMES more.
The postage is still cheaper.