The secret is that there's no "whole amount", because that would imply the concept of "enough money". There's no such thing as "enough money".
I mean that entirely non-sarcastically; to the extent it doesn't go to cover their costs, it goes to increase their profit, which has no upper bound. If they've found a way to extract more money, they'll do it. They question then becomes "to what extent have they found a larger revenue stream, and to what extent have they obtained more money now by alienating customers and driving them to other services".
I've never been so upset about a product like this. I think I paid ~70GBP for the Fire TV and 20 each for two Fire TV sticks and then they sneak advertising in with a software update after the fact. It's particularly egregious because they've recognised the equivalence of ads and charging you money on their tablet range which I think you can buy at a discount if you agree to have ads shown to you on the home screen.
Cable was originally advert-free. It was slipped in gradually over time. They got away with it because people put up with it and didn't call foul and stop subscribing. Expect Amazon, Netflix, everyone to do it. Precedent was set with cable subscriptions. The bar is set very low, and our resistance is known to be pitiful.
I don't think that's true, https://news.ycombinator.com/item?id=13460306
> Bin them. Bin Amazon Prime too.
That would be altruistic but I don't think that enough people will do it with me (and I have no interest in organising them to do so). I'm tempted to return the device since they've changed the fundamental functionality, IMO.
But why would I ever be interested in watching a season in progress when I can watch backlog until it finishes, then watch the entire season on my own schedule?
The first problem goes away after the initial transition, and the second goes away when everyone you know also uses Netflix and/or Amazon Prime. But don't underestimate the value in getting people to switch.
If you keep up to date you can discuss the EP on various forums right after it airs. Then it's something to talk about with your co-workers who are also fans.
Losing subscribers is fine if they don't go anywhere else (because they can't), but losing subscribers to a competitor is a risky move.
Really? So why don't they show more commercials, or charge more for the service?
The reason there are commercials is it allows them to offer the service for less money and most people don't care.
Because there's a balance where doing more would lead to much more immediate revenue loss. Few people would watch a channel with 20 minutes of commercials for every 10 minutes of show, but network TV has already demonstrated that people will watch shows with 8 minutes of commercials for every 22 minutes of show, especially if they don't have a good alternative. The loss of customers from such a move takes longer to show up in the bottom line, and it started before alternatives like Netflix existed.
> The reason there are commercials is it allows them to offer the service for less money and most people don't care.
They're not in the business of offering a specific fixed service for as little money as it takes to cover their costs; that logic would apply to a non-profit or co-op, not a for-profit company. For a for-profit company, lowering prices isn't an end, it's a means.
Of course. There's nothing nefarious going on here. They're constrained by competition, the amount of advertising people will tolerate, and what their customers are willing to pay, but within those constraints they'll set up the business so that between commercials and the monthly fee they make the most money.
> Why can't they just charge tv subscribers the whole amount and get rid of ads on tv?
It's because doing that would mean artificially constraining their own business when they don't have to do that. So why would they?
As the article itself notes, few people buy a subscription service for one or two shows.
If Netflix can continue to bid high enough to starve its competitors of high-quality content (because it can amortize its costs over a larger subscriber base), then no competitor can grow large enough to compete without running substantial initial deficits (which Netflix can make temporarily worse if they choose to, by overpaying for content and driving prices up).
So essentially, lack of competition.
Somewhere is the optimal balance, where they have lots of subscribers, and show just the right amount of commercials to prevent people from leaving, and thus maximize the value of the ad slots.
Personally, I don't pay for anything with commercials. I just don't want to pay to be fed ads. Instead I pay for streaming services and movies. But if they want to sell me premium channels without commercials, I'll consider it.
As for "native advertisements": it really depends on genuineness, and disclosure.
Which amazingly we don't do.
Oh you don't like google and facebook eventually abusing what they know about you? Don't use their services.
However it turned out that by paying for TV they were signaling to advertisers that they were better off (and willing to spend money for things) than regular free-to-air TV watching people, and therefore their eyeballs were worth more. So now pay/cable TV in Australia has more ads per hour than free to air TV.
To pay the bills.
> Why can't they just charge tv subscribers the whole amount and get rid of ads on tv?
That's what premium channels (HBO, Cinemax, etc.) do, and they appeal to a different audience than non-premium cable, because most people are more willing to accept the cost of advertising than the cost of paying for premium channels.
Look at the bottom line. Netflix lost 126 million dollars in 3 months. Revenue per user is negative and going down. Needless to say, this can't last. Either price more than doubles, or ads come.
And how could revenue per user be negative? Even if Netflix were burning cash they wouldn't have negative revenue.
[1 (xlsx)] http://files.shareholder.com/downloads/NFLX/3717249512x0x924...
Think about what your local cable company charges for HBO. They have no advertising and programming is pretty good. Back in the day it was $20/month, now it's something close to $10/mo, right?
What would your cable bill look like if every single channel was $10/month?
Of course, Netflix is well worth the subscription and if you don't watch a lot of TV, it has enough content to keep you entertained for a while. But I've noticed that I discuss HBO shows more with my friends/family than Netflix ones.
HBO was doing that long before Netflix had original programming and Netflix, fairly overtly -- as in, I'm pretty sure I remember Netflix execs saying this -- was following HBO's arc rather than vice versa.
It happened.
Sopranos, The Wire, Deadwood, Sex and the City, Entourage, etc., all well before Netflix did originals.
Netflix has obviously run with the idea though. I'd love to see Netflix and HBO merge actually.
A former Netflix tech guy once told me that "People get Netflix for the movies and stay for the TV shows." Though that's probably less true than it used to be given Netflix Originals and a pretty wide recognition that their streaming movie catalog is limited. Today it's probably the Originals that drive the purchasing (as with HBO).
Lately I'd agree, but a few years ago that didn't have much and it was mostly high quality. So many of netflixs originals seem to fall into the super hero category that I'm not interested in.
Which ones were those? Are you sure they were Netflix originals?
It is true that, if you start slicing out ESPN, A&E, etc. it would theoretically be possible to subscribe to an overall lower cable bill but the cable cos would almost certainly raise per-channel (or mini-bundle) pricing to compensate.
Everyone passed on Mad Men except this little movie-rerun channel called AMC. Would Walking Dead have happened without it?