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>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 o
by 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 agoAnd 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 agoHypothetically, 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.