Netflix crackdown: will it doom them like Blockbuster?
Netflix crackdown: will it doom them like Blockbuster?
You might question whether the subscription fee for Netflix is still worth it after the changes made to the service.
Netflix is testing out a new subscription setup in Canada and three other countries, likely before rolling it out across the United States. This “crackdown“ on password sharing is designed to stop users accessing Netflix from devices not associated with their home network. This change raises questions about the sustainability of the monetization and business models of digital firms like Netflix.
The streaming service has been forced to find new ways to generate revenue due to fears about the stagnating size of its user base. This is because the business model of Netflix is driven by the size of its user base, and concerns about revenue and profit growth have a dramatic impact.
A declining user base plus a rising cost of revenue ends with a business that gradually dies.
Competition in streaming services is the main reason for this issue. As more content providers and others create streaming services, an increasing proportion of content is enclosed in dedicated media enclaves. This requires users to pay a fee for each streaming service, and Netflix has tried to counter this by producing its own content – incurring a high cost of revenues in the process.
The result of this is that Netflix is facing a self–defeating cycle. They are now focusing on short–term hits, while sacrificing quality and diverse content. Users know that their favourite shows may not last, leading to shifting viewing behaviours, and the growing proportion of users dipping in and out of streaming sites is causing a decline in the user base. All of this is resulting in rising costs of revenues and a business that is gradually dying.