4 ms·

As a lay person, Netflix is just the victim of basic capitalism. You need to show endless growth no matter what the circumstances are. Fundamentally unsustainab

As a lay person, Netflix is just the victim of basic capitalism. You need to show endless growth no matter what the circumstances are. Fundamentally unsustainable. I don’t care about Netflix, I was never a subscriber. But I wonder if this is really about Netflix or about the absurdity of the larger system.

ldjkfkdsjnv 4y ago
Victim is the wrong word, more like loser
- louwrentius 4y ago
  I would agree but the game is rigged / unfair so it’s victim.
  - ldjkfkdsjnv 4y ago
    The game is rigged against netflix? one of the most elite and well capitalized companies in the world?
seibelj 4y ago
Content creation is a hit making business. Video games, movies, tv shows, music, literature, etc. People are passionate and work in the industry because it’s a creative effort and you can make a lot of money. But as an investor you should value content businesses with low multipliers because it is difficult to repeat the success. This is also why sequels, formulaic stories, downloadable content, subscriptions, and all manner of solutions to derisking content is applied because of the inherently risky nature of hit making businesses.
throwawaylinux 4y ago
> Netflix is just the victim of basic capitalism. You need to show endless growth no matter what the circumstances are. Fundamentally unsustainable. What's basic capitalism? Is it bad that capitalism victimizes fundamentally unsustainable companies? And to whom does netflix need to show endless growth? Lots of people and even companies do not require or have endless growth, many are content (or at least sustainable) turning a relatively constant profit.
- oneplane 4y ago
  Netflix works fine, they make plenty of profit. The problem is the endless growth requirement (be it from IP owners, share owners, or other stakeholders). It's unrealistic and Netflix could just coast along as-is with very few issues. But they don't want that, they want growth and ever increasing counts in subscribers, content and money.
  - throwawaylinux 4y ago
    I still don't understand what exactly is "the problem". Capitalism punished the people who had unrealistic expectations of netflix's growth.
    - oneplane 4y ago
      The problem is that a profitable entertainment service used and enjoyed by many is somehow going to "not survive" based on unrealistic models applied by people that are neither consumers or producers of the profitable service itself.
      - throwawaylinux 4y ago
        If it's profitable it will likely survive in some form, thanks to capitalism.
        oneplane 4y ago
        Not if 'profitable' is not deemed enough, which is the problem. It's simply never enough (hence the many references to unrealistic infinite growth), so what is most likely to happen is some way to 'restart' the growth count, so we can have a pretend-infinite-growth party again. Maybe a merger, maybe a spinoff, maybe a some other construction.
        throwawaylinux 4y ago
        > Not if 'profitable' is not deemed enough, which is the problem. This is not the case under capitalism, it happens under regulated economies. Under capitalism, "profitable" _is_ the signal of the net value something generates, and that is its own motive. > It's simply never enough (hence the many references to unrealistic infinite growth), Untrue. Many people and companies operate under steady (or even declining) profits, still run while they generate profit. > so what is most likely to happen is some way to 'restart' the growth count, so we can have a pretend-infinite-growth party again. Maybe a merger, maybe a spinoff, maybe a some other construction. A great number of good options for valuable companies and products and services are available under capitalism yes, this is one point I will agree on.
evandijk70 4y ago
Basic capitalism does have something to do with Netflix' problem. However, nowhere in capitalism does it say that you need endless growth. Netflix' valuation was dependent on growth (as signalled by its' PE ratio). Basic capitalism says you need a profit. Netflix will be fine if their profit never grows anymore, and they pay out their profits constant dividend. Even investors will not be terribly disappointed by the zero-growth scenario under its current valuation, which given their PE-ratio would be equal to a 5.8% yearly dividend and no capital gains.
- jnwatson 4y ago
  Theoretically, you are correct. However, growth and non-growth companies are valued significantly different. Growth companies have a P/E multiplier, while non-growth companies can be valued like an annuity. No member of the board would ever sign off on a plan that involves valuing the stock at 20% the current price. That’s why no CEO will have a no-growth plan.

ldjkfkdsjnv 4y ago

Victim is the wrong word, more like loser

louwrentius 4y ago
I would agree but the game is rigged / unfair so it’s victim.
- ldjkfkdsjnv 4y ago
  The game is rigged against netflix? one of the most elite and well capitalized companies in the world?

seibelj 4y ago

Content creation is a hit making business. Video games, movies, tv shows, music, literature, etc. People are passionate and work in the industry because it’s a creative effort and you can make a lot of money. But as an investor you should value content businesses with low multipliers because it is difficult to repeat the success. This is also why sequels, formulaic stories, downloadable content, subscriptions, and all manner of solutions to derisking content is applied because of the inherently risky nature of hit making businesses.

throwawaylinux 4y ago

> Netflix is just the victim of basic capitalism. You need to show endless growth no matter what the circumstances are. Fundamentally unsustainable. What's basic capitalism? Is it bad that capitalism victimizes fundamentally unsustainable companies? And to whom does netflix need to show endless growth? Lots of people and even companies do not require or have endless growth, many are content (or at least sustainable) turning a relatively constant profit.

oneplane 4y ago
Netflix works fine, they make plenty of profit. The problem is the endless growth requirement (be it from IP owners, share owners, or other stakeholders). It's unrealistic and Netflix could just coast along as-is with very few issues. But they don't want that, they want growth and ever increasing counts in subscribers, content and money.
- throwawaylinux 4y ago
  I still don't understand what exactly is "the problem". Capitalism punished the people who had unrealistic expectations of netflix's growth.
  - oneplane 4y ago
    The problem is that a profitable entertainment service used and enjoyed by many is somehow going to "not survive" based on unrealistic models applied by people that are neither consumers or producers of the profitable service itself.
    - throwawaylinux 4y ago
      If it's profitable it will likely survive in some form, thanks to capitalism.
      - oneplane 4y ago
        Not if 'profitable' is not deemed enough, which is the problem. It's simply never enough (hence the many references to unrealistic infinite growth), so what is most likely to happen is some way to 'restart' the growth count, so we can have a pretend-infinite-growth party again. Maybe a merger, maybe a spinoff, maybe a some other construction.
        throwawaylinux 4y ago
        > Not if 'profitable' is not deemed enough, which is the problem. This is not the case under capitalism, it happens under regulated economies. Under capitalism, "profitable" _is_ the signal of the net value something generates, and that is its own motive. > It's simply never enough (hence the many references to unrealistic infinite growth), Untrue. Many people and companies operate under steady (or even declining) profits, still run while they generate profit. > so what is most likely to happen is some way to 'restart' the growth count, so we can have a pretend-infinite-growth party again. Maybe a merger, maybe a spinoff, maybe a some other construction. A great number of good options for valuable companies and products and services are available under capitalism yes, this is one point I will agree on.

evandijk70 4y ago

Basic capitalism does have something to do with Netflix' problem. However, nowhere in capitalism does it say that you need endless growth. Netflix' valuation was dependent on growth (as signalled by its' PE ratio). Basic capitalism says you need a profit. Netflix will be fine if their profit never grows anymore, and they pay out their profits constant dividend. Even investors will not be terribly disappointed by the zero-growth scenario under its current valuation, which given their PE-ratio would be equal to a 5.8% yearly dividend and no capital gains.

jnwatson 4y ago
Theoretically, you are correct. However, growth and non-growth companies are valued significantly different. Growth companies have a P/E multiplier, while non-growth companies can be valued like an annuity. No member of the board would ever sign off on a plan that involves valuing the stock at 20% the current price. That’s why no CEO will have a no-growth plan.