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>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. Really?

• JoshTriplett 10y ago
  > Really? So why don't they show more commercials, or charge more for the service? 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.
  • gozur88 10y ago
    >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.
    • TeMPOraL 10y ago
      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?
      • ethbro 10y ago
        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.
• hvidgaard 10y ago
  The goal is to maximize profits. If they show commercials for 30 min every hour, they lose subscribers and devaluate the commercial slots. 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.
  • vostok 10y ago
    How do you feel about paying for content with product placement or native advertisements?
    • hvidgaard 10y ago
      Far less reluctant. Product placement, is so obvious anyway, but the alternative is some fictional name/logo. It doesn't detract from my experience, so I'm okay with it (for now).
      • TeMPOraL 10y ago
        As long as it's not something utterly absurd - like that Nokia tune in J.J. Abrams' (bastardization of) Star Trek.
    • JoshTriplett 10y ago
      Subtle product placement ("we need a product here anyway, do you want it to be yours or your competitors") seems completely fine to me. If the script calls for them to drive a car or drink a soda, and nothing in the plot depends on the details, then why not? As for "native advertisements": it really depends on genuineness, and disclosure.