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Perhaps we should be looking at the strongest possible version of Stratechery’s argument (which also seems to be the one they presented). Stratechery suggests
by rosndo 5y ago
Perhaps we should be looking at the strongest possible version of Stratechery’s argument (which also seems to be the one they presented).
Stratechery suggests that:
> markets like India have more room to grow, but much lower household incomes, and Netflix’s relatively high prices have been an obstacle.
> advertising-supported or subsidized tier would expand Netflix’s subscriber base, which is not only good for the company’s long-term growth prospects, but also competitive position when it comes to acquiring content.
>This also applies to the company’s recent attempts to crack down on password sharing, and struggles in the developing world: an advertising-based tier is a much more accessible alternative.
>[Ad-supported plans] would provide an alternative for marginal customers who might otherwise churn, and on the other hand, it would create a new benefit for those willing to pay (i.e. no advertising for the highest tiers).
- Ericson2314 5y agoFree tier vs paid tier always made perfect sense in theory, but what industry has actually pulled this off? Newspapers? Hah. Spotify? Perhaps. The problem with capital-gains-driven investment is Netflix can't just sit semi-sustainability at a steady share price and just pay out a dividend. Instead we're likely to see all sorts of jerking around until the business shoots itself in the foot.
- Ericson2314 5y agoWithout getting to "rate of profit tends to fall-y" the goal of a business, rather than its owners, should be to become a utility. Low margin, boring, ubiquitous, essential. This is the highest award society bestows on a good service.