6 ms·

> "Shoving content into the faces of an indiscriminating userbase" maximizes eyeball time which maximizes ad dollars I mean that's not really the case for paid

by donatj 2y ago

> "Shoving content into the faces of an indiscriminating userbase" maximizes eyeball time which maximizes ad dollars I mean that's not really the case for paid services without ads like Netflix. They lose money the more you watch. Ideally you'd continue to pay for the subscription but never watch anything.

mattnewton 2y ago
The marginal cost to serve you more videos is real, but it’s negligible compared to the fixed costs or cost of people not re-subscribing. So I assume that people at Netflix were optimizing for usage/engagement just like the ad driven services as a proxy for subscribe rate.
- agent281 2y ago
  I wonder how much the workforce plays into it. If you have a bunch of people who work at companies that are trying to maximize eyeballs then they shuffle around to different companies, are they going to adopt the goals of the new company? Or is their existing perspective and skills going to shape the new company? I imagine it's a bit of both. Given how big Google and Meta are and how much talent circulates among big tech companies, this might cause companies to lean a bit more heavily into the attention economy than they might otherwise need to. Also, attention is just easier to measure than satisfaction. Makes it easier to fall down that path.
  - swiftcoder 2y ago
    > Also, attention is just easier to measure than satisfaction This is a big part of it. Measuring how long someone stares at the screen is easy. It is in many cases a reasonable proxy for satisfaction - provided you mostly only care about the user as a source of revenue. The social medias have demonstrated fairly concretely that it's a poor proxy if you care about the user's wellbeing. But they already got their bag, so they are hardly incentivised to fix that now.
    - lovich 2y ago
      I wouldn’t say they are hardly incentivized now. They were never incentivized. What company cares about a users well being? The only companies that might care are ones where the population growth rate of humanity is the bottleneck on their new user acquisition and those companies are slowly morphing into sovereign nations already
      - swiftcoder 2y ago
        Indeed. It was however expedient to pay lip service to the idea of promoting user wellbeing at various times (i.e. shortly post-Cambridge analytica at Facebook)
    - kridsdale3 2y ago
      I used to own a part of the Facebook homepage and maximizing its metrics was my job. They told us they cared about wellbeing. I made a feature that demonstrably improved wellbeing, and we had lots of data and surveys etc to prove it. But it decreased watch-time on shortform (what we used to call TikTok style) videos so the Director made me delete it. That started my disillusionment process that eventually made me quit. Money is the only thing that matters to them.
      - swiftcoder 2y ago
        Yeah, I was working at Oculus when the wellbeing narrative started to fall apart across Meta. Was a good time to get out.
    - econ 2y ago
      While it initially makes a reasonable proxy you end up polluting the measurements gradually by engineering for maximum screen time. The Artificialy created screentime is increasingly unrelated to satisfaction and ultimately not at all. Take how Google sorts results by popularity while it is also the main source of "popularity". The word means something different now.
- crazygringo 2y ago
  This is the correct answer. The more you watch, the less likely you are to unsubscribe. If you haven't watched a streamer in a couple of months, that's the first thing you'll cancel when you glance at your credit card statement.
  - bluGill 2y ago
    Netflix could probably get enough goodwill by just automatically not charging people who didn't use their service at all as to be worth it. No hassle, we just keep rolling your subscription over until you watch something again (of course they make interest in the month you paid but didn't use services - that $0.05 should pay for the email and other infrastructure costs needed for a customer that doesn't even use the service). The real benefit of this is when someone does watch something there is no hassle - they are already subscribed and so they don't even think about should the re subscribe. Of course with their ad supported tier they probably don't agree.
    - crazygringo 2y ago
      I think they already remind you after a year of inactivity, and automatically cancel your plan after 2 years of inactivity. But they're a business, so obviously they want you to use it and pay for it.
    - NoMoreNicksLeft 2y ago
      >Netflix could probably get enough goodwill by just automatically not charging people who didn't use their service at all as to be worth it. Is there a circumstance that could cause their stock price to drop to $0 more quickly?
- dowager_dan99 2y ago
  This is the correct mental model. Minor COGS increase < Churn.
lotsofpulp 2y ago
Ads are embedded into the media Netflix sells. See almost any car chase scene, either wholly unnecessary or unnecessarily long to advertise the car brand, many times with the actors’ speaking lines solely to advertise the car. Even critically acclaimed shows like Slow Horses from a supposedly prestige media seller like Apple has scenes where you watch actors put on AirPods Max headphones (obviously with no relevance to the plot). More accurate is “streaming without discrete ad breaks.”
- bigstrat2003 2y ago
  > More accurate is “streaming without discrete ad breaks.” Yes, or as people call it: "ad-free". We all know what is meant by that phrase, being pedantic about "well actually there are ads regardless" doesn't make communication clearer.
  - cess11 2y ago
    What would you call actually ad-free broadcasts then?
    - 20after4 2y ago
      Propaganda?
      - cess11 2y ago
        How did you arrive at this proposal? Is the Mona Lisa propaganda because she isn't holding a branded flask with snake oil?
        erikerikson 2y ago
        GP responded to a comment about broadcasts, not paintings. I think the GP wasn't so far off. If you are not selling products you are still presenting viewpoints, experiences, and ideas.
eadmund 2y ago
> Ideally you'd continue to pay for the subscription but never watch anything. I think that’s Netflix’s actual goal: deliver nothing anyone wants to watch, but keep on promising the possibility of something one might want to watch in the future. Which reminds me, we really need to cancel our subscriptions.
- echelon 2y ago
  > Which reminds me, we really need to cancel our subscriptions. A subscription service to cancel and renew your subscriptions. And stretch goal: annually renegotiate your utility bill so it doesn't 4-10X in cost each winter (for those that live in states that can do that).
  - abustamam 2y ago
    That's pretty much Rocket Money https://www.rocketmoney.com/ https://www.rocketmoney.com/
    - Suppafly 2y ago
      Does it actually work?
      - derefr 2y ago
        In a limited sense, yes. But in spirit, you would probably only describe it as truly "working" (in the sense of accomplishing its claimed purpose) if as soon as it ran out of things to suggest cancelling, it suggested cancelling itself. Which it doesn't. So no. Same as a dating site/app — a dating system truly designed in spirit to accomplish its claimed purpose, would seek to minimize the time anyone spends using the app before uninstalling it. And no such site/app exists. (Although it could — as this is basically the business model of a professional matchmaker, where you pay a large lump sum up-front and then they're beholden to do unbounded work to find you a happy relationship. So they seek to minimize how much of their time you spend, by finding you that happy relationship ASAP.)
dcrazy 2y ago
Netflix’s ad-supported tier makes so much more money per user than their ad-free tier that they had to raise the price of the ad-free tier to make it competitive on ARPU.
- feoren 2y ago
  But those two tiers are not really competing with each other, are they? I'd wager that most people are fixed in one group: either they will never watch anything with ads (e.g. me), or they just don't care about seeing ads. The former group will never switch to the ad-supported tier -- they'll just cancel if the price gets too high -- so the only calculation is price vs. retention among that group. Similarly, the latter group will never pay extra for ad-free, so it's a completely different calculation. Why are the two prices in competition?
  - abustamam 2y ago
    I guess I'm weird because I pay for Netflix/HBO for no ads, but I'm on the ad supported tier for Peacock and Hulu. I guess it's just what I'm used to (I don't expect to see ads on Netflix, but I do expect to see them on Hulu)
    - feoren 2y ago
      Is there a price point where you'd switch between the two tiers for those services? I mean, I guess if they were literally the same cost.
      - abustamam 2y ago
        Good question. I think it's really just status quo. I got Peacock for free thru Xfinity and it was ad supported, but when I left Xfinity I just kept the same tier. Same with Hulu; my wife had ad Hulu before we got married and when we merged finances I had to reason to upgrade. But Netflix/HBO with ads just seems weird to me.
    - nonameiguess 2y ago
hennell 2y ago
>Ideally you'd continue to pay for the subscription but never watch anything. There's a good planet money episode about the economy of gyms. Many really want members, not users. But members who never used would (eventually) cancel. So some had massage chairs in reception or free pizza slice tuesdays to keep the people who rarely came to work out feeling like they were still using the gym, forgetting it was just for a slice of pizza... If there's nothing on netflix people will cancel netflix. So you want them to watch a few exclusive shows a year so they feel like they got their money's worth, while not actually costing netflix much.
- hinkley 2y ago
  There were people who only had HBO subscriptions to watch the new season of Westworld. Given they merged with Cinemax I’m not sure if that worked out for them. But there were also Apple+ subscriptions just to watch Ted Lasso. And I begrudgingly got Prime to watch the Expanse. But when I bought the full seasons it was from Apple. I’m sure Bezos still ended up with most of that money but at least some of it went to Apple instead.
  - jjk166 2y ago
    Prime is a whole different beast. That's about maximizing their ecommerce profit through market manipulation.
    - hinkley 2y ago
      Prime is more like old school Disney that Disney+ is.
- Fripplebubby 2y ago
  > So you want them to watch a few exclusive shows a year so they feel like they got their money's worth, while not actually costing netflix much. No, that's not what the strategy is and they're quite open about it - the strategy is to maximize user consumption for every user, because that keeps them subscribed. I think a lot of people think that they use sophisticated analytics and machine learning etc to decide what to greenlight, but they don't. They use the judgment (and politics, and egos) of Hollywood studio executives (and often the same Hollywood execs that a few years ago were employed in "legacy" media). Although I will grant that they've been innovative in producing/distributing international content, this is really just globalization and labor arbitrage (it is cheaper produce content not in Hollywood, that's not news - they just spend the extra $$$ localizing international content to different global target distribution markets but again, this flow has happened forever, it's just typically been Hollywood -> localization -> foreign market rather than foreign production -> localization -> Anglophone market). Where analytics and ML does come into play is deciding which things out of their enormous catalogue they push to individual users at any one time - that process is highly reactive, individualized, dynamic - that's why strange and seemingly random media become big hits on Netflix while being largely ignored by the commentariat, and vice versa, why series with dedicated fanbases don't get renewed (the analytics tell you that, despite the apparent success, further investment will not improve user engagement with the platform by enough to be worth the spend).
hinkley 2y ago
I can’t believe I’m saying this, but Netflix would probably be better if it learned a few lessons from gyms. I have to go wash my mouth out now. Brb. Some of these companies are trying to go for status now as well. They’re trying to strengthen their brands by picking up epic storylines and making them into the show everyone is watching. Only Netflix is chickenshit and they haven’t figured out that nobody watches the first season of a Netflix show until the second is announced because they know Netflix cancels shows all the fucking time. Which means Netflix cancels more shows because the numbers are terrible. What they should be doing is test audiences. If those people hate it, then yes cancel. And be patient with everything else.
- Suppafly 2y ago
  >Only Netflix is chickenshit and they haven’t figured out that nobody watches the first season of a Netflix show until the second is announced because they know Netflix cancels shows all the fucking time. What's funny is that HBO is worse about that, but everyone watches the new HBO shows because they are big budget and look really appealing. Netflix is also really bad about taking way too long to make additional seasons even if they announce them it's still forever before they come out.
  - dowager_dan99 2y ago
    >> but everyone watches the new HBO shows because they are big budget and look really appealing. This doesn't feel as true anymore. There's still the odd HBO blockbuster but they're producing a lot more garbage as they search for the next hit. And they're not immune to the Marvel approach of strip mining a profitable franchise well past there being any gold left.
  - hinkley 2y ago
    Maybe it's confirmation bias, in that I'm interested in the pitch for fewer HBO shows and so I don't feel it when they get cancelled after a half-assed attempt. Netflix shouldn't bother signing shows without a 2 year contract at this point.
yibg 2y ago
Not directly, the there is a strong correlation between use of the product and retention. Ideally yes users that pay but don't use are the best, but those are rare. The cost of delivering the service on an incremental basis is also low. So all in all, they want users to be using the product as much as possible.

by donatj 2y ago

mattnewton 2y ago

The marginal cost to serve you more videos is real, but it’s negligible compared to the fixed costs or cost of people not re-subscribing. So I assume that people at Netflix were optimizing for usage/engagement just like the ad driven services as a proxy for subscribe rate.

agent281 2y ago
I wonder how much the workforce plays into it. If you have a bunch of people who work at companies that are trying to maximize eyeballs then they shuffle around to different companies, are they going to adopt the goals of the new company? Or is their existing perspective and skills going to shape the new company? I imagine it's a bit of both. Given how big Google and Meta are and how much talent circulates among big tech companies, this might cause companies to lean a bit more heavily into the attention economy than they might otherwise need to. Also, attention is just easier to measure than satisfaction. Makes it easier to fall down that path.
- swiftcoder 2y ago
  > Also, attention is just easier to measure than satisfaction This is a big part of it. Measuring how long someone stares at the screen is easy. It is in many cases a reasonable proxy for satisfaction - provided you mostly only care about the user as a source of revenue. The social medias have demonstrated fairly concretely that it's a poor proxy if you care about the user's wellbeing. But they already got their bag, so they are hardly incentivised to fix that now.
  - lovich 2y ago
    I wouldn’t say they are hardly incentivized now. They were never incentivized. What company cares about a users well being? The only companies that might care are ones where the population growth rate of humanity is the bottleneck on their new user acquisition and those companies are slowly morphing into sovereign nations already
    - swiftcoder 2y ago
      Indeed. It was however expedient to pay lip service to the idea of promoting user wellbeing at various times (i.e. shortly post-Cambridge analytica at Facebook)
  - kridsdale3 2y ago
    I used to own a part of the Facebook homepage and maximizing its metrics was my job. They told us they cared about wellbeing. I made a feature that demonstrably improved wellbeing, and we had lots of data and surveys etc to prove it. But it decreased watch-time on shortform (what we used to call TikTok style) videos so the Director made me delete it. That started my disillusionment process that eventually made me quit. Money is the only thing that matters to them.
    - swiftcoder 2y ago
      Yeah, I was working at Oculus when the wellbeing narrative started to fall apart across Meta. Was a good time to get out.
  - econ 2y ago
    While it initially makes a reasonable proxy you end up polluting the measurements gradually by engineering for maximum screen time. The Artificialy created screentime is increasingly unrelated to satisfaction and ultimately not at all. Take how Google sorts results by popularity while it is also the main source of "popularity". The word means something different now.
crazygringo 2y ago
This is the correct answer. The more you watch, the less likely you are to unsubscribe. If you haven't watched a streamer in a couple of months, that's the first thing you'll cancel when you glance at your credit card statement.
- bluGill 2y ago
  Netflix could probably get enough goodwill by just automatically not charging people who didn't use their service at all as to be worth it. No hassle, we just keep rolling your subscription over until you watch something again (of course they make interest in the month you paid but didn't use services - that $0.05 should pay for the email and other infrastructure costs needed for a customer that doesn't even use the service). The real benefit of this is when someone does watch something there is no hassle - they are already subscribed and so they don't even think about should the re subscribe. Of course with their ad supported tier they probably don't agree.
  - crazygringo 2y ago
    I think they already remind you after a year of inactivity, and automatically cancel your plan after 2 years of inactivity. But they're a business, so obviously they want you to use it and pay for it.
  - NoMoreNicksLeft 2y ago
    >Netflix could probably get enough goodwill by just automatically not charging people who didn't use their service at all as to be worth it. Is there a circumstance that could cause their stock price to drop to $0 more quickly?
dowager_dan99 2y ago
This is the correct mental model. Minor COGS increase < Churn.

lotsofpulp 2y ago

Ads are embedded into the media Netflix sells. See almost any car chase scene, either wholly unnecessary or unnecessarily long to advertise the car brand, many times with the actors’ speaking lines solely to advertise the car. Even critically acclaimed shows like Slow Horses from a supposedly prestige media seller like Apple has scenes where you watch actors put on AirPods Max headphones (obviously with no relevance to the plot). More accurate is “streaming without discrete ad breaks.”

bigstrat2003 2y ago
> More accurate is “streaming without discrete ad breaks.” Yes, or as people call it: "ad-free". We all know what is meant by that phrase, being pedantic about "well actually there are ads regardless" doesn't make communication clearer.
- cess11 2y ago
  What would you call actually ad-free broadcasts then?
  - 20after4 2y ago
    Propaganda?
    - cess11 2y ago
      How did you arrive at this proposal? Is the Mona Lisa propaganda because she isn't holding a branded flask with snake oil?
      - erikerikson 2y ago
        GP responded to a comment about broadcasts, not paintings. I think the GP wasn't so far off. If you are not selling products you are still presenting viewpoints, experiences, and ideas.

eadmund 2y ago

> Ideally you'd continue to pay for the subscription but never watch anything. I think that’s Netflix’s actual goal: deliver nothing anyone wants to watch, but keep on promising the possibility of something one might want to watch in the future. Which reminds me, we really need to cancel our subscriptions.

echelon 2y ago
> Which reminds me, we really need to cancel our subscriptions. A subscription service to cancel and renew your subscriptions. And stretch goal: annually renegotiate your utility bill so it doesn't 4-10X in cost each winter (for those that live in states that can do that).
- abustamam 2y ago
  That's pretty much Rocket Money https://www.rocketmoney.com/ https://www.rocketmoney.com/
  - Suppafly 2y ago
    Does it actually work?
    - derefr 2y ago
      In a limited sense, yes. But in spirit, you would probably only describe it as truly "working" (in the sense of accomplishing its claimed purpose) if as soon as it ran out of things to suggest cancelling, it suggested cancelling itself. Which it doesn't. So no. Same as a dating site/app — a dating system truly designed in spirit to accomplish its claimed purpose, would seek to minimize the time anyone spends using the app before uninstalling it. And no such site/app exists. (Although it could — as this is basically the business model of a professional matchmaker, where you pay a large lump sum up-front and then they're beholden to do unbounded work to find you a happy relationship. So they seek to minimize how much of their time you spend, by finding you that happy relationship ASAP.)

dcrazy 2y ago

Netflix’s ad-supported tier makes so much more money per user than their ad-free tier that they had to raise the price of the ad-free tier to make it competitive on ARPU.

feoren 2y ago
But those two tiers are not really competing with each other, are they? I'd wager that most people are fixed in one group: either they will never watch anything with ads (e.g. me), or they just don't care about seeing ads. The former group will never switch to the ad-supported tier -- they'll just cancel if the price gets too high -- so the only calculation is price vs. retention among that group. Similarly, the latter group will never pay extra for ad-free, so it's a completely different calculation. Why are the two prices in competition?
- abustamam 2y ago
  I guess I'm weird because I pay for Netflix/HBO for no ads, but I'm on the ad supported tier for Peacock and Hulu. I guess it's just what I'm used to (I don't expect to see ads on Netflix, but I do expect to see them on Hulu)
  - feoren 2y ago
    Is there a price point where you'd switch between the two tiers for those services? I mean, I guess if they were literally the same cost.
    - abustamam 2y ago
      Good question. I think it's really just status quo. I got Peacock for free thru Xfinity and it was ad supported, but when I left Xfinity I just kept the same tier. Same with Hulu; my wife had ad Hulu before we got married and when we merged finances I had to reason to upgrade. But Netflix/HBO with ads just seems weird to me.
  - nonameiguess 2y ago

hennell 2y ago

>Ideally you'd continue to pay for the subscription but never watch anything. There's a good planet money episode about the economy of gyms. Many really want members, not users. But members who never used would (eventually) cancel. So some had massage chairs in reception or free pizza slice tuesdays to keep the people who rarely came to work out feeling like they were still using the gym, forgetting it was just for a slice of pizza... If there's nothing on netflix people will cancel netflix. So you want them to watch a few exclusive shows a year so they feel like they got their money's worth, while not actually costing netflix much.

hinkley 2y ago
There were people who only had HBO subscriptions to watch the new season of Westworld. Given they merged with Cinemax I’m not sure if that worked out for them. But there were also Apple+ subscriptions just to watch Ted Lasso. And I begrudgingly got Prime to watch the Expanse. But when I bought the full seasons it was from Apple. I’m sure Bezos still ended up with most of that money but at least some of it went to Apple instead.
- jjk166 2y ago
  Prime is a whole different beast. That's about maximizing their ecommerce profit through market manipulation.
  - hinkley 2y ago
    Prime is more like old school Disney that Disney+ is.
Fripplebubby 2y ago
> So you want them to watch a few exclusive shows a year so they feel like they got their money's worth, while not actually costing netflix much. No, that's not what the strategy is and they're quite open about it - the strategy is to maximize user consumption for every user, because that keeps them subscribed. I think a lot of people think that they use sophisticated analytics and machine learning etc to decide what to greenlight, but they don't. They use the judgment (and politics, and egos) of Hollywood studio executives (and often the same Hollywood execs that a few years ago were employed in "legacy" media). Although I will grant that they've been innovative in producing/distributing international content, this is really just globalization and labor arbitrage (it is cheaper produce content not in Hollywood, that's not news - they just spend the extra $$$ localizing international content to different global target distribution markets but again, this flow has happened forever, it's just typically been Hollywood -> localization -> foreign market rather than foreign production -> localization -> Anglophone market). Where analytics and ML does come into play is deciding which things out of their enormous catalogue they push to individual users at any one time - that process is highly reactive, individualized, dynamic - that's why strange and seemingly random media become big hits on Netflix while being largely ignored by the commentariat, and vice versa, why series with dedicated fanbases don't get renewed (the analytics tell you that, despite the apparent success, further investment will not improve user engagement with the platform by enough to be worth the spend).

hinkley 2y ago

I can’t believe I’m saying this, but Netflix would probably be better if it learned a few lessons from gyms. I have to go wash my mouth out now. Brb. Some of these companies are trying to go for status now as well. They’re trying to strengthen their brands by picking up epic storylines and making them into the show everyone is watching. Only Netflix is chickenshit and they haven’t figured out that nobody watches the first season of a Netflix show until the second is announced because they know Netflix cancels shows all the fucking time. Which means Netflix cancels more shows because the numbers are terrible. What they should be doing is test audiences. If those people hate it, then yes cancel. And be patient with everything else.

Suppafly 2y ago
>Only Netflix is chickenshit and they haven’t figured out that nobody watches the first season of a Netflix show until the second is announced because they know Netflix cancels shows all the fucking time. What's funny is that HBO is worse about that, but everyone watches the new HBO shows because they are big budget and look really appealing. Netflix is also really bad about taking way too long to make additional seasons even if they announce them it's still forever before they come out.
- dowager_dan99 2y ago
  >> but everyone watches the new HBO shows because they are big budget and look really appealing. This doesn't feel as true anymore. There's still the odd HBO blockbuster but they're producing a lot more garbage as they search for the next hit. And they're not immune to the Marvel approach of strip mining a profitable franchise well past there being any gold left.
- hinkley 2y ago
  Maybe it's confirmation bias, in that I'm interested in the pitch for fewer HBO shows and so I don't feel it when they get cancelled after a half-assed attempt. Netflix shouldn't bother signing shows without a 2 year contract at this point.

yibg 2y ago

Not directly, the there is a strong correlation between use of the product and retention. Ideally yes users that pay but don't use are the best, but those are rare. The cost of delivering the service on an incremental basis is also low. So all in all, they want users to be using the product as much as possible.