Case Study 1: QuickFlix

1. Will the video store die out, or will there still be a place for it in the world of Quickflix?
Quickflix's long-term plan is to wean all its customers off discs. Quickflix bought Bigpond Movies' disc-only customers when Telstra abandoned its disc delivery service, so Quickflix will be keen to convert these Bigpond refugees to streaming customers as soon as possible. Quickflix will struggle to wean customers off DVD completely until the NBN reaches critical mass and makes streaming practical for everyone. Even then customers are unlikely to abandon discs until the streaming service offers the same range of movies as the disc service. Of course there's also the fact that the quality of streaming services falls short of discs.
With Quickflix you can enjoy home delivered DVD and Blu-ray rentals and instant streaming of movies and hit TV shows to your internet-connected devices. No need to be stuck with long term agreements, set top boxes and hidden costs.

2. Will the video streaming part of Netflix eventually put the DVD part out of business? There’s a reason Netflix has held on to its DVD business for so long: It’s incredibly profitable. Forty-seven cents of every dollar Netflix customers spend on DVD subscription plans are pure profits. The contributing margin of streaming is far lower, largely due to the high costs of content licensing. That’s why Netflix has long used the money it has made from DVDs to build out its streaming biz: Physical discs first financed the growth of streaming in the U.S., and then bankrolled its international expansion into markets like Canada and Latin America. Paradoxically, Netflix’s success in streaming could accelerate the decline of its DVD business. Up until now, some customers have still held on to both plans to fill holes in Netflix’s streaming catalog with DVDs. But as