What is the Netflix business model?

[MacBH928]

I still can't believe that Netflix offers you unlimited watching for a full months for $10 only. Compare that to buying 1 DVD will cost you $20.

Do they split my $10 equally between content providers, or do they split it based on minutes? So if I watch say Breaking bad for 10 min and then switched it off AMC will only get paid for that 10min?

 

[rocknblogger]

I don't think that's how it works. I think they pay a flat fee for the license to a certain package of titles and it doesn't matter how much any one title is watched or not.

 

[Huntn]

They offer a subscription service whether you are renting physical CDs or streaming. They purchase a license to offer the content, it could be a royalty, purchase, or purchase plus royalty. The content sits on their servers, or on physical disks, which is rented.

See: http://www.fool.com/investing/general/2015/01/31/how-does-netflix-work.aspx

Think of all the local franchises and brick and mortar stores that have gone belly up betting on physical media. I still prefer physical media for purchase, because I'm not beholding to a particular company and I don't need a connection to view it.

 

[MacBH928]

So it doesn't matter how many times I watch a movie or a show, the original content provider does not benefit any more or less? I thought thats how streaming services work. At least thats how I heard Apple Music and Spotify work, for every played song they get like $0.05 or something like that.

I am surprised movie makers agreed to this model.

As for buying physical, a full years of unlimited Netflix is the equivalent of buying 5-7 DVDs which you can be done with in a week or 2. Buying physical doesnt sound too tempting.

 

[Apple fanboy]

So it doesn't matter how many times I watch a movie or a show, the original content provider does not benefit any more or less? I thought thats how streaming services work. At least thats how I heard Apple Music and Spotify work, for every played song they get like $0.05 or something like that.

I am surprised movie makers agreed to this model.

As for buying physical, a full years of unlimited Netflix is the equivalent of buying 5-7 DVDs which you can be done with in a week or 2. Buying physical doesnt sound too tempting.

But sometimes it's nice to own your content. If Netflix were to lose the rights to your favourite titles you can't watch them.
Or if your wifi goes belly up for the evening.
I think buy some, stream others is the way forward.

 

[twietee]

Also, you still have an extremely limited choice in the first place.

 

[Huntn]

So it doesn't matter how many times I watch a movie or a show, the original content provider does not benefit any more or less? I thought thats how streaming services work. At least thats how I heard Apple Music and Spotify work, for every played song they get like $0.05 or something like that.

I am surprised movie makers agreed to this model.

As for buying physical, a full years of unlimited Netflix is the equivalent of buying 5-7 DVDs which you can be done with in a week or 2. Buying physical doesnt sound too tempting.

About your first comment, I don't know. I don't believe Netflix has an ownership aspect like iTunes or Amazon. Once those are attached to your account via the latter options, you "own" them at least until those companies go belly up. And for physical media, I only buy movies I dream worthy. Everything else I stream.

 

[0388631]

Flat fee. I asked support once when I first became a member. Between it and being a Prime member, I don't think I've had the need to rent or purchase a DVD/Blu-Ray in years. Though it would be worthwhile for Amazon to start a DVD and or Blu-Ray rental service.