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Comment by joseda-hg | Hacker News Reader

There's a separate cash flow problem on doing this, a big chuck of the expected revenue comes from people that setup the subscription and forget about it

I tend to care lot less on keeping something like dropout even if I don't use it all the time (I like to think I contribute keeping it afloat, and watch it whenever), but I cancel other subscriptions a lot more aggresively (I've unsubbed/resubbed to Gamepass plenty of times specially when playing random stuff with friends, there's something nice of the exploratory playing you do when you don't need to care who has bought which game)

On the pattern I use dropout, they'd get a month or two of revenue out of me (Binge a couple of their limited runs and catch up on their staples) and zilch for the rest of the year even if I'm a happy customer

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It's an interesting point, because it gets to when streaming services' content costs are paid.

Are they upfront? Or do they pay per view royalties at the end of a streaming period? Or likely mix of both, varying by each piece of content terms?

Hypothetically, if a streaming service structured most of their obligations in the form of post-view true-up's, they wouldn't have any problem doing this. And could make bank on the float between customer payment (first of month) and paying for their content (end of period).

Streaming services mostly pay for licensed content up front. That’s why video streaming is much more like a traditional tech company - high up front costs with very low marginal costs compared to streaming music companies where their costs stream linearly with their revenues

For movies and series, there's a process called "Minimum Commit" where the media companies have to commit to spend $X for a bundle of content that includes both the content you want to sell and a random selection of crap to pad out the offering. Then it depends on the deal, but often the amount that each item is watched then contributes to the royalties cost. The relative exclusivity you might want will then dictate the overall cost and royalties returned.

For sports it's different, typically you bid for the right to own a geographic market and the games are sometimes split into bundles where you can bid for one or all bundles depending on how deep your pockets are. You'll then get to keep exclusive or non-exclusive rights for a certain number of years. You'll then pay annually/quarterly for that right at the total bid package for the term of the deal (e.g. 5 years). Depending on the contract you might be able to re-sell that right to other companies as well, which dilutes your audience, but may increase the distribution overall.

Then aside from the rights, you end up paying infrastructure costs both fixed and variable. You also generally commit to CDN capacity for distribution based on a forecast of how much you think your customers will watch in any quarter.

Fascinating! Thanks! I figured someone here would know modern practice.

I was flummoxed the other day when I talked with someone who was a content equity trader -- I didn't even realize that class of finance existed.

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