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Netflix and Zero Hedge

So this morning I was reading Zero Hedge -- useful and weird source of financial news.  This morning Bill Blain posted that Netflix was a Ponzi scheme. Frankly, I'm not certain that Bill understands what's a Ponzi scheme, nevertheless. 

So, there are three funny things in this post:  (1) the aforementioned "Ponzi" scheme idea, (2) that there is both nothing to see on Netflix but that they spend too much money on content, and (3) That what on TV is better than Netflix.

Now, a Ponzi scheme involves paying off old investors with new investor money.  Since Netflix provides a service to more than 125 paying customers...not a Ponzi scheme, and since the company is making money (it seems that its net margin is around 10%) then on US$ 12 billion, it's not a bad business. So, its clear that Netflix is not, in fact, a Ponzi scheme (although its good clickbait -- if it was refuted elsewhere).

The second issue is content, which I admit is less than fantastic at times -- but seriously better than what you get on Amazon, which is largely unchanged from month to month.  There are two issues here; first Netflix is really a video store -- does anyone remember how terrible most of the movies available at blockbuster really were?  Secondly, and this is sad, the fact that Netflix blocks VPN means that I no longer have access to Netflix France, Sweden and other parts of the world.  I saw epic series on these various Netflix -- that are sadly not available here.  I saw the complete Girl with the Dragon Tatoo (all three movies -- in Swedish with subtitles), and many many "local" shows.  But I understand Netflix's business model.

The last one is that the writer only watches Netflix if there's nothing good on TV...about six months ago I tried to watch live TV for the first time in two years.  It was not a happy experience, never again.

Finally, there is the idea that its insane for Netflix to spend US$ 7 billion on programming.  Insisting that this represents new client acquisition costs (forgetting the other 125 million subscribers!).  In fact, US$ 7 billion presents US$ 56 per subscriber, that pays annual fees of $120.00.  I actually call that really good if you consider that its entire distribution systems is a big hard drive and computers...


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