Question

Explain: Netflix basically charges one fee for access (True it does vary by number of devices you can connect with, but the fee is to the entire library, regardless). Why does Netflix stay with this bundling revenue model as opposed to switching to a different revenue model?

Answer 1

Netflix charge one time fee for access and there is limit to the persons who can access it. The reasons behind this is:

• The competitors of Netflix have adopted the same strategy. If Netflix adopts the other strategy through which they give access to one customer per account which helps in raising revenue but Netflix will loose its market because it will become costlier for customers.
• Netflix providing good content and having one time fee for many customers is accessing the market. Once they have the greater share or comparative advantage than their peers, they can change their strategy and limit the customer per account to one.
• Netflix is making habitual its customers to its content. Once the customers are accustomed to it, they can raise prices accordingly.