Re:Netflix Earnings Are Driven by Investment in Original Con...
by TeMPOraL on Monday January 23, 2017 @06:44AM
(#13461500)
And so circling back to the original question:
> 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?
Re:Netflix Earnings Are Driven by Investment in Original Con...
by ethbro on Monday January 23, 2017 @07:59AM
(#13461857)
Hypothetically, because they've reached a local maxima. And they recognize that their customers like their current product.
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.
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.