It's not really that simple when you account for the "triple play" style packages. People are getting their internet, phone, and TV all together for around $100

It's not really that simple when you account for the "triple play" style packages. People are getting their internet, phone, and TV all together for around $100/month. People don't really understand what portion of their bill goes to each of those services, but they view all three of them as critical (with phone service rapidly becoming provided by cell phones). There is pretty well understood psychological effects of bundle pricing. When you break out just movies, $10/mo might be what people actually want to pay. I suspect the actual right price point for the mass populous is somewhere > $10 and < $50... but Netflix has to live in a world where people already have TV, thanks to aggressive bundle pushing strategies from cable companies. At $10/mo, Netflix is priced the same as Stars & friends: like "channel packs".