They themselves point to the cost of dvds vs blu-ray discs, implying they pay those rates. Quoted from their letter to me, "And as you've probably heard, Blu-ray discs are substantially more expensive than standard definition DVDs." Yes, I did hear that. Sadly for them, I know it's only true at the retail level. I know they pay "fees" (whatever you want to call them) for the right to rent the discs, which isn't the same as the costs of the discs at retail. Fees aside, they do not pay retail prices for the discs themselves. Often they don't even use retail discs, but copies made for them for the purpose of rental. For them to claim that the "fees" for a movie are higher because the media it comes on is different would be just silly. If the fees are different, either they are stupid and getting taken by the movie companies, or they are lying. Either way, I don't want to pay for it when their competition isn't asking for it. The only legit cost difference they could point to would be the disc cost, which is minimal. A difference of $2 or less per disc production costs at retail bulk rates. Just because the studios think it's ok to rape the public by selling for $8 more a disc that costs only $2 more to make doesn't mean we're all so stupid we don't know what the game is. Netflix is lying or inept, and just want's more money, plain and simple.