With a recurring fee model, it’s in the business’s interest to make you use their service less while still paying, because if you use it too much they lose money, and if they price it according to how the power users use it then it won’t be a competitive deal.
You know I never thought of streaming services this way, but you’re absolutely right. Any service running on a regular subscription model falls into the “gym business model” where the ideal customer is one who is paying but never showing up. That way, their operational costs stay constant while revenue goes up.
The dynamic applies to anything where you are expected to make regular payments.
Renting an apartment? Landlord wants to see you and fix your shit as little as possible.
Renting a car? They want you to drive it as little as possible so they can keep renting it for as long as possible. Maybe they’re charging you by the mile, too, just to cover that base completely.
Except its a LOT easier to get people to not go to the gym than it is to stop them watching TV and movies.
I think this is why Netflix keeps canceling shows. People stay subscribed for new things, but since their catalog is shit they aren’t streaming much else.
Netflix’s model makes the individual business case for a specific show really complicated to make. What’s the marginal return on investment for a moderately successful show? If it’s not quite popular enough to get people to subscribe just for that show, then it’s basically a total loss (existing customers only are watching it, who were paying anyways). Looking at the financials of that one show in isolation, all they’ve got are costs with no revenue gain.
There is the broader argument to be made about how a show contributes to the overall catalog quality and how that ultimately drives subscriber growth, but this is a far more roundabout way of talking about value.
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You know I never thought of streaming services this way, but you’re absolutely right. Any service running on a regular subscription model falls into the “gym business model” where the ideal customer is one who is paying but never showing up. That way, their operational costs stay constant while revenue goes up.
The dynamic applies to anything where you are expected to make regular payments.
Renting an apartment? Landlord wants to see you and fix your shit as little as possible.
Renting a car? They want you to drive it as little as possible so they can keep renting it for as long as possible. Maybe they’re charging you by the mile, too, just to cover that base completely.
Now think about the US healthcare industry.
Except its a LOT easier to get people to not go to the gym than it is to stop them watching TV and movies.
I think this is why Netflix keeps canceling shows. People stay subscribed for new things, but since their catalog is shit they aren’t streaming much else.
Netflix’s model makes the individual business case for a specific show really complicated to make. What’s the marginal return on investment for a moderately successful show? If it’s not quite popular enough to get people to subscribe just for that show, then it’s basically a total loss (existing customers only are watching it, who were paying anyways). Looking at the financials of that one show in isolation, all they’ve got are costs with no revenue gain.
There is the broader argument to be made about how a show contributes to the overall catalog quality and how that ultimately drives subscriber growth, but this is a far more roundabout way of talking about value.