Thursday, November 10, 2005

10-Q says what the Netflix settlement might cost

Here are some tidbits of news from the Quarterly Report (10-Q) Netflix, Inc. filed yesterday with the SEC.

I've been wondering what the settlement would cost Netflix. All they say is that, "The Company estimates the total cost of the settlement will be approximately $3,980,000 with the actual cost dependent upon many unknown factors such as the number of current and former Netflix subscribers who will claim the settlement benefit."

If there are 3.5 million current subscribers, and they estimate in the settlement agreement that it affects six million potentially eligible class members, then about 2.5 million could sign up for their one month free, costing Netflix from $9.99 to 17.99 per month per person in revenues and added fulfillment expenses. The top limit would be about $45 million, if every single eligible former subscriber took them up on the offer.

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