As Netflix transitions its focus and subscriber base over to its streaming service, the company hopes to shave off some of the more than $600 million it pays the USPS annually for its by-mail service. According to one analyst, however, Netflix’s projected postage savings will not offset the rising costs of acquiring streaming content.
Wedbush Morgan analyst Michael Pachter believes that digital license fees for TV content alone will cost Netflix $200 to $600 million annually. Netflix’s new deal with Disney/ABC alone will be quite costly for the streaming provider. Said Pachter:
“In our view, the Disney/ABC content constitutes around 25% of the total television content Netflix intends to offer . . . And we think the emergence of streaming competition (Amazon) could drive content costs even higher,”
With content acquisition costs spiraling ever higher, will Netflix’s subscriber growth keep pace? Let us know in the comments how you think the company will fare over the next year.
(via Home Media Magazine)