No Stupid Questions

Inflation is a decrease in the value of money itself. If there’s a lot more money around today than there was yesterday, then money is less scarce than it was before. Scarcity is a major contributor to value by the theory of marginal utility:

Suppose you have no first aid kit. Gaining a first aid kit gives you a tremendous amount of value! Now suppose you get a second first aid kit. Still valuable, but not as much as the first.

Now you suppose you have a thousand first aid kits. What are you going to do with all of them? You can’t possibly use them all yourself! So you might as well give them away or try to sell them.

First aid kits have declining marginal utility. Having way more than one gives you very little value relative to the value you gained from the first one. On the other hand, those first aid kits will have much more value for other people who don’t have one yet. Thus it’s better to distribute first aid kits than to hoard them.

Most things work this way. One of the main exceptions is money itself. The more money you have, the more you can do with it! Of course, at large enough levels of wealth, what you can do for yourself personally (buy food, clothes, shelter, entertainment) shows the same diminishing marginal utility: being able to afford a steak dinner every day is one thing, but nobody is going to eat 10,000 steak dinners every day!

On the other hand, the other use of money is to hold power over others, and there’s no limit to that, unfortunately. The biggest problem is the existence of people who actually want that!

There’s an equation for value I learned from a boss of mine. Value equals:
Benefits received / Costs incurred

Costs aren’t always monetary; your time and energy is also a cost. And benefits aren’t always tangible; it can include things like peace of mind.

In order to increase price, you have to also lower other costs OR increase benefits, otherwise you lower value.

And value is a perception, not an objective measure.

Did they change anything meaningful to you when they increased their price? If not, then their value decreased—at least for you.

But maybe they added some amazing kid safety controls at the same time as the price increase. If you don’t have kids, the value went down. But a parent who wants those features might have net neutral or even positive value perception.

yes.

Theory, economics, etc., all have something to say about it. But at the end of the day, Netflix (and the rest) want to deliver as little as possible for dollar of revenue.

depends if the price change is above or below inflation.

if prices rise quicker than inflation you get less value for money

Not necessarily.

In theory if the price increases were at a slower rate than general inflation, the effective cost goes down. Additionally, they could add additional content, thus increasing the value of the provided service, at a rate greater than price increases.

In practice, yes Netflix and other streaming services have been becoming less valuable as time goes on because while costs have been driven up, available content has generally stagnated or even decreased as more media companies decide to open their own platform, pulling their content from the competition and diluting streaming value across the board.

Enshittification refers not just to making things crappier, but to a process in which different people benefit. iirc:

• first the customer gets a lot of value and the platform loses money (bc the service is building a customer base)
• then the vendors get a lot of value bc the platform privileges them (this is most obvious with amazon - not sure if there's a direct parallel with netflix, maybe the rights holders?)
• then the shareholders get a lot of value bc the platform squeezes every single possible penny out of the customer and the vendors.

Netflix is very far into the enshittification process. Many years ago it was a pretty good platform. But now if you are a paying customer, you can expect the service to get continually worse.

Not if they also increase the value (like adding new TV shows).

Technically, no. However, in today's society if you aren't making more profit this quarter (line go up) than last quarter you are seen as failing to meet your fiduciary duty to shareholders. More accurately, if the rate at which your profit is increasing isn't increasing (line describing line go up) you are likely seen as failing the shareholders.

It's no longer acceptable to deliver to your customers, make a steady profit, and be sustainable. Now you must cut every possible corner, deliver as little value and use as little labor as possible, make more profit, and "stay competitive" or your company may as well be failing... in the eyes of investors.

Unless you claim you are working on a technology like AI that can eventually let the company fire all of its workers and make all the money without having to pay humans for labor... in which case ignorant investors will light money on fire for you until they think someone else is definitely going to do it better or they think you can't deliver.

The measure of the value is not just the increased cost but also the amount of content. Also a big measure of the value is specific to the subscriber.

If you are watching more Netflix now than you were 5 years than it is highly likely your measure will tell the value has increased.

Yes. You get less value for your buck but shareholders get more value for theirs

Netflix would probably claim that consumers are getting more value due to increased original programming versus a decade ago. Also blaming inflation.

A lot of people complain about Netflix being poor value. I feel like I get more than my money's worth from it and always have.

Value is inherently subjective. Money, gold, products, services only have value because of people. An ant doesn't care for a solid brick of gold, it serves no purpose for the ant, but humans see the shiny metal as incredibly valuable. And while the same ant might think that a small insect as valuable food, most humans do not see the same singular insect as all too worthwhile to eat.

What is valuable to you could be worthless to somebody else. In the context of Netflix, most people probably consider it to be decreasing in value as the content (or the quality of it) has not increased enough to compensate. However, there are some people that might be looking forward to a Netflix-exclusive show and believes that it adds a lot of value. In that case, the price increase might be worth it for them.

Something similar could be said for other streaming services. Spotify, Apple Music, etc. could have your favourite artist listed that can't be listened anywhere, and you might consider that valuable.

Only if the content doesn't drop away.

It does, even if they have a long list of things you want to watch, the opportunity cost rises for doing that over saving the money for something else. As well market segmentation removed a lot of various back logs for the different platforms so they have to produce more, newer work to keep interest.

I think it might fluctuate given that their catalog varies with new entries and shows no longer being available, so youd have to check every now and then and compare the size of libraries vs subscription price over time

One way they will get around this through consolidation of companies as they merge and strike deals. We’ve already seen Disney+ “add value” when they added Hulu to their package. Long history of this but streaming is scary cause it’s not just traditional tv media. The goal of Netflix isn’t to be a movie studio. All of these “streaming” companies all want to become an Amazon. Grow, grow, grow. Add gaming, add some shopping, add a built-in advertising and data aggregation tool, whatever it takes, then get bought out bigger fish. Become new product. I give it a decade before “big tech” controls Hollywood and most American media.