netflix price in us

Remember When Pundits And Regulators Warned Netflix Could Never Compete With Comcast?

Every time a major corporate merger is announced, pundits predictably warn of impending doom if regulators allow it to happen. Here’s an example from Susan P. Crawford’s 2012 book Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age (Kindle edition location 2098):

Get The Timeless Reading eBook in PDF

Get the entire 10-part series on Timeless Reading in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

We respect your email privacy

Q2 hedge fund letters, conference, scoops etc

netflix price in us

jgryntysz / Pixabay

"The absence of any effective regulatory regime or oversight over the cable giant makes it unlikely that Netflix will ever be able to challenge Comcast. Comcast has a number of options that will make it extremely difficult for independently provided, directly competitive professional online video to challenge its dominance."

Now that a few years have passed and the dust has settled from the Comcast-NBC merger, how has it affected Netflix? Rather differently than Crawford feared, as any student of Schumpeter could have predicted. Here is an excerpt from last week’s cover story in The Economist, titled  “The Tech Giant Everyone is Watching”:

"This year its entertainment output will far exceed that of any TV network; its production of over 80 feature films is far larger than any Hollywood studio's. Netflix will spend $12bn-13bn on content this year, $3bn-4bn more than last year. That extra spending alone would be enough to pay for all of HBO’s programming—or the BBC’s. … Its ascent has mirrored the decline of traditional television viewing: Americans between the ages of 12 and 24 watch half as much pay-TV today as they did in 2010."

Within a year of Crawford’s book, Netflix began producing high-quality original content, an innovation she did not foresee. Her whole project was a waste of time and effort.

The lesson here is that pundits and regulators don’t know any better than you or I how a merger will turn out. And unlike investors and entrepreneurs, they don’t have their own money at stake so they don’t have any incentive to innovate or react to changing conditions.

Of course, another lesson is that pundits and agencies will not heed that first lesson. As the same Economist story points out, “Some suspect that Netflix harbours ambitions to monopolise tv.” So the cycle repeats itself, and likely for no good reason.

For more antitrust lessons, see Wayne Crews’ study The Antitrust Terrible 10: Why the Most Reviled 'Anti-competitive' Business Practices Can Benefit Consumers in the New Economy.

Reprinted from the Competitive Enterprise Institute.

Ryan Young

Ryan Young is the Competitive Enterprise Institute's fellow focusing on regulatory and monetary policy and financial regulation. He also hosts CEI’s weekly podcast and writes the popular “Regulation of the Day.”

This article was originally published on FEE.org. Read the original article.

LEAVE A COMMENT


Saved Articles
X
TextTExtLInkTextTExtLInk

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Congrats! Are you a smart person?

We have an exclusive targeted for being a sophisticated and loyal reader.

Sign up for ValueWalkPremium today and get our exclusive content for 35% off.

Use coupon code vip19 or click on the button below

Limited time offer only ENDS 12/31/2019 or after next 25 subscribers take advantage whichever comes first – please do not share this discount with others

 

0