4 ms·
They have large fixed costs for content. Subscriber growth amortizes those costs across a wider base.
by pchristensen 15y ago
They have large fixed costs for content. Subscriber growth amortizes those costs across a wider base.
- sounds 15y agoAlthough that's a fair first-order approximation, look here: http://files.shareholder.com/downloads/NFLX/1403529688x0x500395/7c72e777-75c5-4f7f-9640-5b06f8cc54e4/Guidance_Update_Sept_2011_final.pdf http://files.shareholder.com/downloads/NFLX/1403529688x0x500... I'd break their costs down into per-byte costs and per-subscriber costs. The fixed content costs are only fixed until they renegotiate their contracts. Most media businesses look to merge with the content creators to eliminate those costs altogether. I believe the real discussion going on is whether Netflix has a viable long-term business model. I believe they do, and I'm glad they got rid of DVDs.