Netflix Streaming Margins Are 11 Percent, DVD Margins Are 52 Percent

If you look closely at Netflix's fourth quarter earnings, it will become clear why the company wanted to split its DVD and streaming businesses. This is the first quarter that the company is splitting out each business and reporting revenues, profits, and margins separately. While the streaming business is growing (adding 220 subscribers domestically in the quarter), and the DVD business sis shrinking (it lost 2.76 million subscribers domestically), it's margins are much worse than the legacy DVD business. The streaming business has an 11 percent profit margin, compared to a very healthy 52 percent margin for the DVD business.

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