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Netflix: Savings or Latte Factor
16 03 06  16  22
-------- $19/month, $228/year
 I am a big fan of Netflix. For a fixed fee I get as many movie (DVD) rentals as my eyes and the fairly efficient postal service can tolerate. I do not happen to watch too much television. My wife insists on basic cable for $14/month ($168/year) so that her family can watch TV when they visit us. In 2005, and so far in 2006 I didn’t watched a single hour of in-home television programming.
I do, however, like to spend time in front of the tube. I love to watch a movie after dinner. What I do not like is to be restricted by schedules or limited offerings. I also don’t like to get up and drive to the video club, spend half an hour deciding what to watch, and then after watching the movie driving it back to the video club, on time, to avoid late fees. Netflix puts entertainment at my fingertips, and it arrives and goes out of my house with little effort from me.
Am I getting a good deal or am I paying a hefty fee for the convenience? Lets take a glance at my Netflix movie watching over the years:
| Year | Number of Movies | Effective Price Per Movie |
| 2003 | 85 | 2.68 |
| 2004 | 60 | 3.80 |
| 2006 | 24 | 9.50 |
As it happens with any subscription service, the charge is done whenether you use the service or not. Fill up your life with too many entertainment or work activities and you end up wasting some of the paid goods/services included in your subscription. Last year there where three full months when we didn’t watched a single Netflix movie. Last year, we paid a lot of money for the convenience, while in 2003 and 2004 we did realized savings over the default alternative: the Video Club.
Lets review other alternatives:
- Buying New DVDs - New DVDs can be expensive. $15 to $30 for 2 or 3 hours of entertainment. They do hold a collectible interest for those who collect them. However, if it is purely to be able to watch the movie, I would choose other alternatives.
- Buying Used DVDs - Half.com offers the same DVDs that you can buy at the video store, but cheaper. (In the order of $10 or $15 for a DVD, probably including shipping). You loose the enjoyment of ripping apart the cellophane covering of a new DVD, but in exchange can buy around two DVDs for what you could have paid for one. If you get disciplined, you can view the movie and sell it again on the same Half.com service, thus reducing the cost of your entertainment. If you can’t decide whether you want to keep a DVD or not after watching it, use this kind of service.
- Non-Subscription Based Service - PeerFlix.com offers a similar service to Netflix but based on peers as opposed to a centralized company. They charge around a one dollar service fee for each movie traded through their service. To keep track of the movie trades you do they give you “credits”. You receive credits when you send a movie and spend credits when you receive a movie. The service allows you to get the movies you want and hold them for as long as you want, without incurring in subscription fees. This is best suitable for those with a large collection of DVDs that you do not mind trading for others you haven’t seen. If you do not have a large collection of DVDs to trade, you may not want to participate – it can get expensive building a trading collection.
Convenience is not bad. You just have to be sure you are aware of its price and what else could have been paid with such price.
For me, systems like Netflix are still the ones offering the most convenience for my dollar. However, if you only watch very few movies at home, you might want to consider a non-subscription method like buying your own CDs or using PeerFlix. |
