From the San Jose Mercury News via Siliconvalley.com
By Mary Anne Ostrom
Netflix is a hit with consumers, but as its subscriber base grows, the most common complaint is the wait for the hottest movies.
Under revenue-sharing agreements with most of the top studios, Netflix pays on average $1.40 to the studios each time a new release is mailed to a Netflix user. But those deals typically expire after a year, which means Netflix enjoys a much higher profit margin when users request older films or those released through independent studios with less expensive sharing arrangements. Netflix said new releases are seldom recommended for fear of disappointing users if there is a wait. Hastings says, ``Creating the demand gets a better margin. This is integral to the formula.''