Those Bits Aren't Free: Netflix Could Be Racking Up a $2 Billion Content Tab

Investors are cheering on Netflix as it moves from DVDs to streaming video, and keeps adding customers along the way. But "digital" doesn't equal "cheap." In fact, the online move has cost Netflix at least $1.2 billion.

That's the amount the Netflix has committed to paying Hollywood studios for the rights to stream their movies and TV shows. And it's up from $229 million three months ago. The magic of the Netflix Web model, though, is that as people consume more on the Web, they cut back on discs.