Netflix is focusing on digital video services while the DVD-shipping business is left to wither on the vine. But the domestic streaming segment delivers operating margins of just 18.5% vs. the DVD business sitting pretty at 50.1%. Is management certifiably insane for chasing growth in a far less profitable market?
In this video, Anders Bylund will explain why the streaming strategy makes sense. It's a riveting story of dueling business models: fixed costs vs. fixed margins. Watch his take, then drop down to the comments box to share your own views on the subject.
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The article Why Netflix Is Chasing Growth in a Lower-Margin Market originally appeared on Fool.com.Fool contributor Anders Bylund owns shares of Netflix, but he holds no other position in any company mentioned. Check out Anders' bio and holdings or follow him on Twitter and Google+. The Motley Fool owns shares of Netflix. Motley Fool newsletter services have recommended buying shares of Netflix. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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