How Bitcoin can Change Netflix’s Revenue Model

How Bitcoin can Change Netflix’s Revenue Model

In January 2014, right after Overstock.com announced their Bitcoin integration on the website, rumors started floating around that Netflix would be the next big company adding Bitcoin as a payment option. This rumor was powered by a tweet from Max Keiser:

This does seem a very logic option, as Bitcoin can completely change Netflix’s revenue model. How? The answer is simple: pay per view.

The main advantage of Bitcoin are its worldwide usage, sending money in seconds, and no transaction fee’s. Those 3 factors can make PPV a reality for Netflix. Currently netflix bills you $8 per month, which gives you complete access to all their movies, series & tv shows. However, sometimes you don’t even watch 2 or 3 movies in a month due to being busy or anything else that takes up your time. At that moment the pay per view model comes in handy.

It works as follows: You do not pay a standard subscription fee, but instead only pay for the movies that you watch. They could make an episode of The Simpsons $0.10, and a complete movie $0.25. When you want to watch a movie, a screen pops up with a Bitcoin address. You pay the $0.25 (0,0002978 BTC) and start watching the Movie. The currency can be used worldwide, and the sending process can be completed within seconds.

Now you might ask yourself: Why wouldn’t this system work with just a Credit Card? The answer is: Transaction fee’s. The average Credit Card payment processing fee is roughly 1.60% plus a $0.10 standard fee. This means that when a user want’s to pay for a movie for $0.25, Netflix will lose 1.60% + $0.10 of that amount to the Credit Card processing company. This is the only thing that makes the pay per view model unprofitable at this moment, and Bitcoin is about to change that!

4 comments

  1. they dont need to change their business model, dont fix what aint broken.
    they can just ADD a new revenue stream with PPV. they could have done this a long time ago as you can already
    do this on amazon, youtube/movies, and itunes.

    not sure if bitcoin is enough of a reason for them to make that addition to their value proposition which is pay a flat rate and watch as much as you can.

    it’d be cool thiugh im all for it, but dont take away my flat rate plan, perhaps you dont use netflix as much as i do, but here it’s used HEAVILY on a daily basis, i have two toddlers with ipads and there is a huge amount of content offering for them on the platform. me i binge tv shows and documentaries, and the ocassional blockbuster release as well as a ton of anime.

  2. I would love to see Netflix start accepting Bitcoin, but pay per view is the wrong way to go. You have to take into account the psychology of the purchase and pain of paying. If someone pays once a month, they only have to make the decision to part with their valuable money once a month. If they have to pay every time they watch, even if it is a tiny amount, they watch as much and they won’t shell out as much money.

    In addition to the pain of making the decision to part with some of my money each time, I wouldn’t want to go through the hassle of making a payment and waiting for confirmation for every single thing I watch. The best way to do pay per view, whether it be with credit cards or bitcoin, would be to make a large up front payment to get credit that you use as you go, not micropayments.

  3. How would they deal with the inherent volatility of the market though? Not to mention that I HIGHLY doubt the studios would allow netflix to undercut their very lucrative pay per view model on a lot of their shows. At least, not the 25 USD cents you are suggesting. MAYBE a USD dollar per show.

  4. I would much rather continue to pay $8 per month subscription fee, just in BTC. I watch a lot of stuff on Netflix, that method would never work for me.. I would not want to be continually paying for episodes with btc. Its a cumbersome process and would certainly end up being more than $8 with the pricing you outlined. I am for Bitcoin as a payment method.. I would use it without a doubt, just not with that kind of pricing scheme.

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