back to article Tapping the Bank of Mum and Dad: Why your Netflix subscription is poised to rise (again)

If Silicon Valley still does one thing better than anybody else, it's propping up profitless corporations, just like the Bank of Mum and Dad. Gulf states pour money into Premier League teams, but not on anything like the scale of Uber and Netflix, two examples of capital-swallowing money pits. On Monday, Netflix warned …

  1. Craigie

    I struggle to believe that anyone would invest money into Uber at this point.

    1. wolfetone Silver badge

      "I struggle to believe that anyone would invest money into Uber at this point."

      From organising several meet ups with various friends etc (for the record, aren't connected to each other) is that no one says "I'll get a taxi to yours" it's more "I'll get an Uber".

      It's in the public conscience of the great unwashed that Uber means a better taxi (when in most cases it isn't), so for as long as the public are saying the name Uber and paying over the odds for it, then people will continue to invest.

      1. ThomH

        I think the problem with that theory is that between 2015 and 2017 Uber's share of the market declined from 92.32% to 78.23% by spending, from 89.59% to 75.31% by total rides.

        So the pitch is: hey, we're a well-known company although we're not currently profitable, and our market position is declining. Please invest?

        1. Adam 1


          I don't think you can look at the statistics that way and draw any sensible conclusions. The percentage may have dropped but the pie is much bigger. If the market was "people who need rides somewhere", encompassing all taxi services* rather than just Uber vs Lyft vs whoever else then you will probably find those stats showing growth.

          I would be more concerned about corporate governance and culture issues that seem to always leave it a handful of controversies away from failure.

          *Uber is just a taxi service by any sane definition

      2. Oddlegs

        If Uber are as ubiquitous as you say and STILL not making any money then heaven help them when their competitors finally get their act together

      3. IsJustabloke

        "Uber means a better taxi"

        I've never heard a single person say "I'll take an uber" I hear plenty of those same people say, "I'll grab a cab to yours"

        I also expect that the word "uber" has come to mean taxi/cab in the same way the hoover means vacuum cleaner.

      4. John Brown (no body) Silver badge

        no one says "I'll get a taxi to yours" it's more "I'll get an Uber".

        Well, for balance, and despite Uber operating around for a year or two, I've never heard anyone use Uber as a generic term for Taxi. Quite the opposite in fact. People have multiple taxi booking apps on their phone, Uber only being one of them. Apps for taxis were around before Uber. Uber just happened to spend billions on marketing and bending/breaking the law to get more publicity.

        1. Anonymous Coward
          Anonymous Coward

          Uber is easily replaceable

          Its an app that connects riders and drivers. Anyone competent to write apps could write it. There's no way for Uber to prevent either riders or drivers from using someone else's app, and if enough competition comes along someone may create an app that checks the pricing for Uber, Lyft and any regional/local competition to give you the best price.

          The main reason Uber has all the mindshare and marketshare is because they are cheaper than the competition, where today "competition" = taxi. Once they've killed off taxis, they can't just rise prices to a profitable level, because the competition will prevent that. They hope to make more money someday by having self driving cars so they don't need to pay the riders, but it isn't like Uber will be the only one who has self driving cars when they arrive so again they won't have the monopolistic pricing power they'd need to justify their current valuation.

      5. big_D Silver badge

        Over here, Uber has a bad reputation. Its only press is that its drivers are operating illegally and therefore without insurance. Few want to risk it.

        1. Mark 65

          While Uber has a clear path to monopoly profits one day – by wiping out the local taxi competition and installing itself as a municipalities delivery infrastructure – Netflix's path to world domination is much more questionable and tenuous.

          I sincerely doubt that this will happen either. Uber is a money pit. Somewhere where VC dollars go to die. They are gaining market share by VCs subsidising the cost of your fare. At some point the VC dollars will dry up and Uber will be gone.

  2. Dan 55 Silver badge

    Beyond the Originals, there are the acres of dross, a TV and movie graveyard stretching to infinity

    Netflix is why we should dismantle the BBC, apparently. Well it's not looking too good. And Amazon's worse.

    Yes, I thought I'd crowbar that in there.

    1. JeffyPoooh

      "...Amazon's worse."

      Dan 55 suggested that "...Amazon's worse."

      Amazon Prime Video has a huge advantage over Netflix. After three minutes of browsing Amazon Prime Video, you can conclude that they have nothing worth watching (other than The Grand Tour, where we're still waiting for Season 2 to become available). So you can turn it off, and go back to doing other things without wasting a lot of time, as one might do with Netflix.


      1. big_D Silver badge

        Re: "...Amazon's worse."

        Prime Video's big advantage is that it is "free" for existing Prime members, it is an add-on to a service they were using anyway.

        We watch something on Prime probably twice a month and it is the only OTT service we have.

  3. Stevie


    I love analysis that pushes the "cord cutting" argument without mentioning the fact that enormous numbers of consumers buy their broadband from the cable TV companies in virtual monopoly situations.

    Cut the cord? How.

    1. Anonymous Coward
      Anonymous Coward

      Re: Bah!

      I'll also point out that in the US, cable companies have manipulated their pricing such that TV plus internet is normally cheaper than internet only (which is still 3-4X more expensive than other comparable countries).

      I may still cancel TV because there's nothing to watch

      1. Sappa

        Re: Bah!

        Exactly the same here in the U.K. I will be cancelling my cable TV. We hardly watch the Beeb either. So it will shortly be a Freeview box plus Amazon for us

        1. big_D Silver badge

          Re: Bah!

          I've been on Freeview (or rather its German equivalent) since 2002. We have had Prime Video since the FireTV appeared over here - the initial discount price for Prime members made it an acceptable risk, to see what it was like. We don't use it that much, but it is okay for a "free" service.

          Broadband has always been over our telco, so telephone + internet. We currently spend around 40€ for 100/20mbps connection + 3 VOIP phone lines and flatrate telephony services to landlines and mobile.

  4. Tom 38


    While Uber has a clear path to monopoly profits one day – by wiping out the local taxi competition and installing itself as a municipalities delivery infrastructure

    Utter bollocks. Uber do not exclusively control the only useful commodity - drivers - and the average consumer uses Uber because it is subsidizing fares, making it currently cheaper than other Lyft or Gett or any of the others.

    If they did get to their glorious promised land of monopoly, and raised prices to a "gouge-worthy" level, people would switch to another provider. If Uber has forced all the others out of business, one will restart.

    It's exactly like complaining that China have a monopoly on rare earths; if they raised the price, they would no longer have a monopoly as other mines would start.

    Uber will only increase its share whilst it is subsidizing fares.

    1. Anonymous Coward
      Anonymous Coward

      Re: Uber

      Uber's path to a monopoly would look very shaky if a major brand like Amazon were to decide to become a taxi ride brokering firm. Something Amazon "might" do if it saw it as a clear path to profits that could also potentially help its delivery business.

    2. JimC

      Re: Uber

      If one were a real cynic who had a really low opinion of Uber management one might think that its business plan merely needs to be credible enough to keep the investors coming in and paying the executives all those generous bonuses.

      1. ratfox

        Re: Uber

        Indeed. For all the advantages Uber has over traditional taxi companies, there's not much that they do which is revolutionary or difficult to emulate. The biggest advantage they have is the number of users... But then, Groupon also had a lot of users at some point.

    3. fandom

      Re: Uber

      "It's exactly like complaining that China have a monopoly on rare earths"

      That happened already a few years ago, there used to be some articles by Tim Worstall right here at ElReg about it.

      1. Naselus

        Re: Uber

        "there used to be some articles by Tim Worstall right here at ElReg about it."

        Almost completely certain that the other poster was basically referring to those exact same articles.

      2. Anonymous Coward
        Anonymous Coward

        Re: Uber

        I still miss Tim. Whatever his article might contain for a topic, the forum was lively! As for "rare earths," only rare in amount in a bucket of earth by weight. Afghanistan is sitting on about $1trn of the stuff. Which might explain China's maneuvers in the place. Partially. Jihadist activities being the other.

  5. Erik4872

    Why not do this if you get a monopoly at the end?

    When most people think of a monopoly the image of a state-owned enterprise comes to mind -- inefficient, expensive, etc. But Netflix and Uber are just following Amazon to where Microsoft was (and is working on going back to.) If you think of the end goal as having no competition, and therefore not having to constantly squeeze nickels out of your operation to keep up with the other nickel-squeezers, then why not spend whatever it takes to get there?

    Uber already has Kleenex-level brand recognition. "Taking an Uber" is part of the lexicon these days, and I'm sure they know that if they keep pumping money in they will eventually drive competition out. Back in the pre-2000s era,Walmart in the US spent massive amounts of money to open stores in every little town. It was expensive but they eventually drove out all the mom and pop businesses, and now enjoy a near-monopoly on goods and groceries in many areas. Anyone looking at monopolies of the past and not seeing an opportunity to become one themselves is not thinking ultra-long term.

    Now, admittedly some of the talk is starting to smell vaguely of "this time it's different" and "eyeballs are the new profits" and "we'll make it up in volume." We'll see whether Netflix and Uber become monopolies...the US is already starting to tee up the conversation about Amazon...they're currently putting many retailers out of business. I never thought I'd see Sears on the verge of bankruptcy in my lifetime for example...

    1. katrinab Silver badge

      Re: Why not do this if you get a monopoly at the end?

      Microsoft has a monopoly because you can't easily create another operating system that is compatible with all the software out there that people use.

      Walmart has a monopoly of sorts because you can't easily acquire all the real estate with planning permission for supermarkets to have a national store chain. Having said that, I don't think they are in a position to do monopoly pricing, certainly not in the UK.

      What does Über have that a competitor couldn't replicate? People use them because they are cheaper than the competition. There's threats to their cost base from potentially having to charge VAT and pay minimum wage, and they aren't making profits at the moment, when at this stage in the business lifecycle, they should be. I don't see them expanding much in the markets they are already in. Expanding to new markets will increase costs, and they probably picked the most profitable / least loss-making ones first. I don't see them making as much money in Aberdeen for example as they do in London.

    2. Anonymous Coward
      Anonymous Coward

      There's no way Uber and Netflix can become monopolies

      I already wrote about Uber in a post above. Netflix is even less able to become a monopoly, because they already have plenty of streaming competition today, and more is on the horizon.

      For what you get, Netflix's price is really good - but that's because they are losing billions every year to subsidize your low price. If they tried to rise their prices enough to break even, they wouldn't be such a good deal anymore and more people would choose Amazon, Google, Apple, etc. streaming alternatives. The exclusive titles help, but it isn't like those others don't have money to develop their own exclusives if they wish. Or outbid Netflix for other content like first run movies making Netflix basically have nothing worthwhile beyond their exclusive content.

  6. John 104

    Netflix Worth It?

    We don't pay much a month for the service. Around $20 for streaming and DVD rental. But the content isn't that great either. Streaming is OK if you are into documentarys. Their original shows are not to my liking, so there is no value there. Disc rental has a so so library. We keep our subscription because it is cheap and offers some entertainment. If the prices ever go up dramatically, I'll likely just cancel. Plenty of content to stream on Amazon Prime after all..

    1. Stevie

      Re: Netflix Worth It?

      Yes. Very much so. Personally I think their "entire season release" model is innovative and allows the viewer much better ways to experience a show while fitting it to their personal schedule.

      I find myself asking if there would be shows like "Game of Thrones" if not for the emergence of Netflix and Amazon.

      1. Dan 55 Silver badge

        Re: Netflix Worth It?

        GoT is in its 7th series and HBO has always pushed the boat out a bit. Netflix started streaming in 2008 and had little of own content then. If anything HBO showed Netflix what to do when it comes to content.

        1. Stevie

          Re: Netflix Worth It?

          "GoT is in its 7th series and HBO has always pushed the boat out a bit. Netflix started streaming in 2008 and had little of own content then. If anything HBO showed Netflix what to do when it comes to content."

          Not the point I was making. HBO still dribbles out the show bit by bit to keep people hooked for the season length. Netflix uses a completely different model for show such as House of Cards, allowing the viewer to binge watch.

          This has paid dividends and brought in the punters rather than filling the screens for only three days or so as predicted by the trad series schedulers.

          "Sopranos etc". Never watched it, but that show was entirely based on practical sets and had minimal post-production effort. Different beast entirely from Game of Thrones from almost every standpoint but script strength (apparently, as I said, living in Metro NY through the 80s and 90s made the show a bit ... superfluous from where I was sitting. I wouldn't watch a show about computer administration either for the same reason).

      2. What? Me worry?

        Re: Netflix Worth It?

        "I find myself asking if there would be shows like "Game of Thrones" if not for the Sopranos." sorted that for ya. :)

    2. Chris Parsons

      Re: Netflix Worth It?

      I think it's crap. I had a short trial with them when it started, but my interests are not blockbusters, so it's obviously wrong for me. Also, our broadband is an oxymoron, so any streaming is fairly low quality and means no-one else can do much at the same time. And I bet I'm not alone there.

  7. Kaltern

    While Amazon Prime still make you pay to watch some shows DESPITE already BEING a subscriber, they're never going to realistically challenge Netflix for overall popularity. The only reason Amazon is still in the streaming game is down to their exclusive content, for which, arguably, is worth the admission fee.

    I really don't like the way Amazon hide a lot of their stuff behind an extra paywall. It isn't particularly cheap neither. I'd happily pay a little bit* more monthly to Netflix, assuming they don't start hiding content in the same way.

    * A LITTLE bit. Maybe a £1 or so. It's easier to 'borrow' the same programming from nefarious sources than it is to pay for it these days... but it's nicer to do it legitimately.

  8. John Smith 19 Gold badge

    Given Uber's rep for poor background checks shouldn't the correct synonym for Uber be...

    rapist, rather than hoover?

    Hmmm. Perhaps sharing a "rapist" to somewhere is the most sensible policy.

    Basic lesson in economics.

    Once upon a time joint stock companies are run for the benefit of the stockholders, IE delivering stock price rises and dividends.

    These companies seem to be run solely for the Board, who may not own any shares in the business (or have a big pile bought at greatly discounted price because of their job).

    On that basis wouldn't you be pretty stupid to buy shares in them?

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