They were able to do that because the cost of rights to the films were much lower a decade ago. Now the studios are wising up, and charging a lot more for these rights. Netflix can't continue charging the same low price if the cost to the rights skyrocket.
Well, even though I do see streaming as the wave of the future, and even though getting a DVD by mail seems outmoded compared to everything else I do (e-books, MP3 music, e-banking, e-billing, etc.), the fact is that with streaming Netflix (and other similar companies) are always running the risk of being cut off at the knees by the content providers, and their streaming selection is really lacking relative to their DVD selection.
The reason the DVD selection is so much more expansive is that because of first sale doctrine, Netflix could just run around buying DVDs retail, or on e-bay or whatever if the movie companies tried to shut them out, so the movie companies have an incentive to meet them halfway. With streaming, the movie companies set the terms almost completely and often just toss Netflix scraps like B-movies and really old stuff that fall short of being considered classics.
The reason I have the DVD package instead of the streaming package is that I can get the movies I want to see that way (I just save the new movies when I see ads that they're hitting the theatre, and 9 months later or whenever when Netflix gets them, they're added to my queue. Same with watching tv series a bit on delay. And I can catch up on classic movies in between). The streaming selection is too minimal and not really a good value for me- very little top new movies, surprisingly thin selection of classic titles, etc.. I can't find enough to watch streaming to justify it.
The DVD package lets me see all the latest hit movies- just on a less than one year delay- plus almost whatever classics or tv series I want to catch up. 90-95% of what I look for is there. When I used to have streaming (Back when it was a throw-in and not a separate package), I'd say maybe 5-10% of what I was looking for was there. I just couldn't find enough that I really wanted to watch on the streaming service to justify paying the price they want for it.
Maybe the future of Netflix actually is DVDs- where they can still circumvent the studios in a pinch and provide a top notch selection at a low price. The streaming they provide now is worth maybe $1 or $2 a month due to the limited selection, and they charge $8. And then if they go get a better selection and make it worth the money, they'll then have to raise the price to maybe $20-$30 a month, which won't be worth the money even with an increased selection. I just don't see that developing in a way that I'd be happy with, even though in theory streaming to a cheap box near a tv set would be much easier then mailing dvds back.
Hollywood is too greedy. I like their content when I can get a large selection at a low cost, like with Netflix DVD. If that changes, I'll go back to what I did a few years ago- almost never seeing movies. They'll get none of my money instead of a small portion of it regularly. I'm not "addicted" to movies the way I am to sports and stuff like that. I can take it or leave it. It's entertaining if I can pick what I want and the price is right, but if I can't or it's not, I can read a book or listening to some music or surf the web or watch something on television instead.
