Netflix says streaming content costs more

As more consumers show interest in streaming content, Netflix CEO Reed Hastings said licensing fees for streaming content are still higher than media offered on DVDs, but that could change in the future.

Although Netflix started out as a DVD rental service based on shipping movies via mail, its streaming service has become even more popular.  The streaming costs are a matter that Netflix and other vendors will deal with as the industry continues to mature.

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"We think we can continue to spend more money [licensing] and continuing to get more [digital] content," Hastings said during a recent investor conference.  "Do we have to bid against other people? We do. And that’s a natural part of the process.”

Hastings noted Netflix is working with Epix, HBO, Starz, Showtime, and several third-party companies so it can have access to a wider catalog of electronic content for subscribers to watch.  Netflix already has at least 100,000 DVD and Blu-ray movie titles for subscribers to choose from, with a constantly growing streaming catalog available.

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Despite a current higher cost for streaming rights, Netflix expects streaming content to continue to be a major business in years to come -- and the popular movie rental company continues to sign up new streaming users.  In April, we published an article detailing that Netflix's first-quarter profit drastically increased, with streaming services the driving factor behind the growth.

Netflix ended Q1 with 1.7 million new subscribers, and almost 14 million subscribers.

Even though there is a higher interest in consumers cutting cable in favor of Netflix and other Web-based services, Netflix said it hasn't seen a correlation quite yet.  Hastings noted Netflix may offer movies and TV episodes, but it doesn't include sporting events and current news.

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I think Hastings is still being a bit coy about streaming -- especially as broadcasters plan to stream sporting events -- but his thoughts do indicate a problem that must be addressed in the future.  If enough subscribers leave behind paid subscriptions, then maybe more sports and live news will be streamed over the Internet.

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