It is almost like a politician has taken over NetfFix. Being from NJ, I remember when our state fruit, governor Jim McGreedy, came up with a plan to balance the budget by raising taxes on cigarettes. Unfortunately those horrible smokers quit en mass and left a huge hole in the budget. An example of the basic math behind this stupidity is this.
You have 100,000 people smoking that pay a 1.00 tax for a total of $100,000.00
You raise the tax on cigarettes by .50 to get an additional $50,000.00
You plan on getting $150,000 total.
40% of the smokers quit.
60,000 remaining smokers pay the new $1.50 tax for a total of $90,000
You may say Reed, that is a $10,000 dollar loss. Wrong! That is a $60,000 loss. Remember $150,000 was spent in the budget.
Let's say we change the new tax number from .50 to .75, that changes the revenue to $105,000 dollars. That assumes the extra .25 does not get anyone else to quit. It is still a $55,000 loss and a guarantee that less people will be in the tax pool going forward.
Where is all this going? What does this have to do with Netflix? Simple, if 40% of the people who are currently on NetFlix quit, they will lose money. Worse, going forward, less people will join NetFlix in the first place.
With the business climate that NetFlix is in, they do need to increase their rates. My problem is that I usually get stroked before I get F*!^ed, well at least I got a movie out of the deal. If NetFlix wanted customer's like me to stay, they should have at least offered free Blu-Ray or some other insignificant(to their bottom line) additional services.
To all of the people that I have talked into joining NetFlix, I apologize. The service was good while it lasted though.
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