Netflix Limits Growth to Appease Studios

Netflix Limits Growth to Appease Studios

Netflix share price has risen steadily over the past four months as expectations for growth have been very good. But the company has recently capped it’s profit margins at 10% to appease studios that fear excessive price cutting by retailers is hurting the bottom line of the production companies. Redbox in particular has cut prices to the point where the studios cannot profit. Any Netflix profits in excess of the 10% are to passed along to the studios in the form of additional payments for streaming media. The company is set in increasing it’s streaming catalog beyond the current 10,000 movie and television products.

The studios may pursue even more profit as movies are moved to the streaming option from the home delivery program. Netflix plans to continually increase it’s streaming content list to compete with online options that have become very popular as of late, such as Hulu.com. Hulu recently considered charging fees for their content which caused an uproar in the online community. Netflix has a much better model were customers pay a flat rate of $20.00 and can watch as many streaming videos as they desire. And customers can use any number of different devices to receive streaming content including television, XBOX, desktop computer, iPhone, Ruko, and many others.


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