Would you donate?

See I don't think it would based on personal experience. I used to work in Game Development and no matter where the game was priced it had little impact on piracy. One game we even sold on a pay what you want basis for an official copy so could have paid just £1 (where it basically cost us more in transaction fees than we made lol) and it was still massively pirated.

You basically have 3 groups, those who will almost pay any amount for something they enjoy and those who won't pay any amount for something they enjoy. The middle group who are price dependent are actually fairly small and are often more the casual consumers

 

I don't think at this point Netflix do have a long-term plan to recoup. They clearly hoped that being cheap would hook people without hurting the content producers revenue streams so they would still charge peanuts for the rights and then they would be able to corner the market.

If you look at US Broadcast TV as an example.

• TV Shows are produced by a production company who are commissioned by a network to make it
• The network pays a commissioning fee that is a percentage of the production costs
• This fee is covered by the ad income
• The production company then cover the rest via the secondary market (Home Media, Syndication, International sales and merchandise)

Now an hour-long show costs on average in the region of $3-4mill an episode. The networks used to pay well over 60% and above of that and for a major hit like Lost they would even often be paying MORE than the production costs.

The problem is one of the areas SVOD services hit was both live viewers which impacted ad revenue but even more so they killed viewing figures for repeats. US networks used to make a 22-24 episode season last all the way from August to May because they could show 2 new episodes then 2 weeks of repeat episodes and not lose too many viewers for the repeats over the new episodes.

Rather than watch a repeat when the network wanted to you watch it you could choose what repeat you wanted to watch on SVOD to a point where it made more sense for Networks to just commission extra shows and show the seasons fairly unbroken (or what often happens now they will have their 22 episode show, will run half unbroken, take it off for the holidays after the holidays stick a different show in that slot which only has a 8-13 episode order so the main show can get ahead with its episodes and the main show will finish the season out when the other show finishes it run) but that doesn't generate more income and means they are actually paying for more new episodes in total so they are willing to pay less as a commissioning fee, even the biggest hits are lucky if the network pays over 50% now.

The production company hence has more costs to cover but Netflix is also impacting the secondary revenue streams. Disc media was on the decline but Digital media was rising at about the same rate as disc media was declining but SVOD increased disc decline and hindered digital rises. Syndication (where a show gets to 60+ episodes and you sell the old episodes to another channel who will show 1 every weekday until they have showed them all before they will loop to the start again, see the US shows on E4 during the day as an example of this) was especially hard hit. Seinfeld for example sold for $3mill an episode and was sold to the 6 largest operators of local affiliates so was making $18mill an episode. When the Big Bang Theory syndication was sold that was bought by the national cable channel TBS for $1.5mill an episode and for Fox for its local affiliates for an extra $500k. And a big part of the difference between making $18mill and $2mill an episode is SVOD's impact on syndication. And its got worse since.

So suddenly Netflix went to renew deals and rather than getting charged peanuts for a package of rights deals for the studios popular shows they were being asked much more for just one of the shows that used to be in the package thus increasing costs. So they had to pay it but the didn't have the brand loyalty to increase prices to cover the new costs so they issued bonds still hoping to have market loyalty before anyone else entered the market hoping by the time they matured they would be able to charge the same kind of prices paid tv was charging. Others entered the market though which made prices to acquire content go up again as now there was bidding wars for content, Hulu ended up paying $2mill an episode a year for Seinfeld having got into a bidding war with Netflix, Netflix paid around the same for The Blacklist having got into a bidding war with Hulu. So Netflix kept having to issue bonds (they have issues between $2bn and $4bn in bonds every year). They tried to make themselves stand out by commissioning originals, these cost more but couldn't just be taken away and were better for marketing but they don't help their cash flow. They also thought they could expand internationally and get the take up they saw in the US but they have struggled (They crow about their international growth but its from 189 countries which makes them much less Impressive) because they just can't get the content, many of these countries had local SVOD appear and while the ABC/CBS/NBC/Fox/CW's in the US aren't paying to acquire us first run rights (or second run rights) for the likes of Doctor Who the likes of BBC, ITV, C4 were paying a lot for US TV content like Lost, 24, House, X-Files etc and Sky were also breaking the bank to acquire such US content as well and Netflix UK's budget couldn't compete.

So all in all Netflix is in a mess, they have more competition than ever, still are surviving on new bond issues every year, the first round of bond issues matures in the next couple of years and they don't have the money to pay them off so will need to take more debt to pay them off. The only way we get to 2030 and Netflix exist still is if someone else buys them but I have a feeling that was actually their exist strategy as they hoped someone like Disney would buy them but Disney choose to buy Fox for both their content and technology and some other streaming tech companies and roll out their own. Most of the other big media companies are also rolling out their own and acquiring smaller studios for their content so I'm not sure where Netflix has to go

 

They may be on iFollow but it doesn't mean they are legally available. If its available in the US and not the UK and you are watching it in the UK then you aren't legally watching it (Although its a bit more of a grey area, at least the clubs benefit, its only really an issue if a UK broadcaster has the game or another game which you then arent watching)

 

You don't have to read it if you don't want. @Storck asked a question, one that has a complex answer

 

Technically yes you can argue watching content that you aren't licenced to view isn't illegal, its the people retransmitting it that are at fault. However all these illegal iptv services use peer to peer meaning you aren't just watching but you are helping distribute the content so yes watching them is illegal