What is Netflix thinking?

Recently, Netflix decided to sever its streaming video and DVD-by-mail services, charging a flat fee for each that would raise prices by 60 percent. Given the success of its streaming service—which now comprises nearly a third of the country’s Internet traffic during peak hours—perhaps Netflix could be trying to "push" content providers to give their customers more streaming content. But this works only if customers value the "right now" over the "right movie."

It’s common knowledge that Netflix’s streaming offerings are patchy and unpredictable, light on new releases and heavy on catalog obscurities, and that a movie or a TV series you’re in the middle of watching can disappear overnight. But what if Netflix wants disgruntled customers? Sandoval speculates that Netflix assumes most customers will drop DVDs in favor of streaming, and studios will be faced with two choices: either make more titles available via streaming, or accept that Netflix’s customers will just watch something else. It’s already trained its members to wait four weeks, during which new movies are available to buy but not to rent, in order to expand its selection of Instant titles. So why not assume they’ll wait forever, or failing that, move on? Search for Drive Angry, and Instant helpfully suggests you watch Kick-Ass instead.

If this is right, it must be that Netflix faces less competition in the "streaming" industry than in the "DVD rental" industry.