Netflix has an unsustainable business model in the meantime.

Becky Berkman

2019-05-02 13:30:00 Thu ET

Netflix has an unsustainable business model in the meantime. Netflix maintains a small premium membership fee of $9-$14 per month for its unique collection of TV shows, programs, and movies etc, whereas, HBO charges $15 per month. With its original video content, Netflix earns a mere net profit of 28 cents per subscriber (in comparison to $3.65 for HBO) due to high programming costs and low subscription prices. As Netflix expands into international video markets, these margins cannot be feasible in the long run.

Netflix relies on vertical integration to curate more original video content with lower programming costs. As the average Netflix subscriber streams video for about 2 hours per day, this integration empowers Netflix to charge higher premiums. Netflix can run ads on the broad network of almost 150 million subscribers worldwide (60 million U.S. subscribers) as of early-2019. Ad executive heads from YouTube and JPMC to external media agencies such as UM and MediaLink view running ads as an inevitable fresh fallback route for Netflix. With $15 billion annual costs and $10 billion debt mountains, Netflix needs to find feasible ways to monetize its user base. As NYU business valuation professor Aswath Damodaran suggests, Netflix now has an unsustainable business model.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

Most business organizations should continue to create new value in order to achieve long-run success and sustainable profitability.

Peter Prince

2020-09-10 08:31:00 Thursday ET

Most business organizations should continue to create new value in order to achieve long-run success and sustainable profitability.

Most business organizations should continue to create new value in order to achieve long-run success and sustainable profitability. Todd Zenger (2016)

+See More

Higher public debt levels, interest rate hikes, and subpar Chinese economic growth rates are the major risks to the world economy.

Daphne Basel

2019-01-23 11:32:00 Wednesday ET

Higher public debt levels, interest rate hikes, and subpar Chinese economic growth rates are the major risks to the world economy.

Higher public debt levels, global interest rate hikes, and subpar Chinese economic growth rates are the major risks to the world economy from 2019 to 2020.

+See More

Thomas Piketty connects the dots between economic growth and inequality worldwide with long-term global empirical evidence.

Chanel Holden

2023-05-28 10:24:00 Sunday ET

Thomas Piketty connects the dots between economic growth and inequality worldwide with long-term global empirical evidence.

Thomas Piketty connects the dots between economic growth and inequality worldwide with long-term global empirical evidence. Thomas Piketty (2017) &nbs

+See More

It can be practical for the U.S. to impose the 2% Warren wealth tax on the rich.

Dan Rochefort

2019-02-03 13:39:00 Sunday ET

It can be practical for the U.S. to impose the 2% Warren wealth tax on the rich.

It can be practical for the U.S. to impose the 2% wealth tax on the rich. Democratic Senator Elizabeth Warren proposes a 2% wealth tax on the richest Americ

+See More

Platforms benefit from positive network effects, scale economies, and information cascades.

Rose Prince

2019-07-25 16:42:00 Thursday ET

Platforms benefit from positive network effects, scale economies, and information cascades.

Platforms benefit from positive network effects, scale economies, and information cascades. There are at least 2 major types of highly valuable platforms: i

+See More

Allianz chairman Mohamed El-Erian bolsters a new American economic paradigm in lieu of the Washington consensus.

Apple Boston

2018-04-20 10:38:00 Friday ET

Allianz chairman Mohamed El-Erian bolsters a new American economic paradigm in lieu of the Washington consensus.

Allianz chairman Mohamed El-Erian bolsters a new American economic paradigm in lieu of the Washington consensus. The latter dominates the old school of thou

+See More