How Netflix Plans to Fend Off Amazon, Hulu Plus, HBO, and Time Warner

In 2010, Netflix spent roughly $550 million on postage fees, a sum that has declined significantly from years past and could drop even lower in 2011. Thanks to ramped up streaming efforts, the number of DVDs Netflix is mailing out to subscribers is beginning to slow, says Steve Swasey, VP of corporate communications. That's good news for the company, which pays about "$1 roundtrip" per DVD, according to Swasey, and significantly less to deliver that content online. But such success in the digital market has also increased competition from the likes of Amazon, HBO, and Hulu--not that Netflix feels any of these companies have become direct competitors yet. "There will be [competition] at some point--Netflix won't run without pure competition for long," Swasey says. "Right now, there are three models, and Netflix is running uniquely with the subscription model." The other two models, he explains, are the pay-per-view model, which is "the Amazons and Apples and Blockbusters," and freemium, ad-supported model, such as Hulu--not Hulu Plus -- and YouTube.