Netflix knows that it can’t compete with some of the biggest streaming companies online because those sites are supported by advertising, pay-per-view or large monthly customer fees. The company also knows that in some ways it can’t compete with cable and satellite companies. So, how does a company like Netflix make money?
As a result, Netflix has decided to provide a smaller catalog filled with high quality, high-resolution, entirely commercial-free content that its users prefer at a low monthly fee that is expected to attract a great deal of interest. Netflix accomplishes this task by picking and creating HBO-level premium content that matches the algorithmic feedback of its users interests based on their previous streaming video viewing decisions. Essentially, Netflix provides premium services at budget prices.
Companies like Comcast, Time Warner, Dish Network, Hulu, Google, Amazon, Apple, Sony and Microsoft will eventually have to follow a similar model or switch to offering other services to make up the losses from customers who switch from a scheduled linear model of viewing to non-scheduled binge viewing.