Question

how to do company's cost and benefit analysis (curve) of online streaming company (subscription-based) like netflix and spotify.

Hi There,

Can anyone explain the revenue and cost analysis of the online streaming companies such as Netflix or Spotify? Based on my understanding, cost curve in the text book is analysed based on one product, so profit maximising rules says MC=MR => profit max. However, for these type of companies, they have to add more production cost - variable cost (new movies produced or licensed) but the revenue is based on subscription per user. How this curve (FC, VC, MC, MR) works on the company's level rather than one product level? how the cost curve looks like in this case? Thank you!

A confused eco student

Answer 1

Please find the below attachments:

A cost-benefit analysis could be a method businesses use to investigate choices.

The business or analyst sums the advantages of a situation or action so subtracts the prices related to taking that action.

A cost-benefit analysis could be a method that companies use to investigate options.

The business or analyst adds the advantages of a situation or action, so subtract the prices related to taking that action.

Netflix cost benefit analysis
:

Advantages of obtaining Netflix
1. Learn new things from movies.
2. Be able to easily watch any movie you want to watch
3. Get a film education
4. Have a great reward for hard work.
5. Improving my quality of life with an abundant offer of excellent films
.

Disadvantages of getting Netflix
1. Waste of time and distraction from doing more important things.
2. You will feel the need to get the value of my money and can watch movies compulsively
3. I will not live a minimalist lifestyle
4. More time in front of a computer per week
5. Less time to read

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