I don't know how Netflix producing content and making it exclusive to their subscription service is a win for consumers.
If anything, merging content with distribution sparks competition to produce content at reasonable prices. Netflix has also resorted to releasing content in a more enjoyable manner (all at once vs. weekly with commercials).
You've just described cable. If those subscriptions start to come in packages we're back to square one.
The argument against it was that the company providing the content would be exclusively providing that content.
The rebuttal is that it would be better to pay 5 companies that all produce exclusive content than to pay for cable, which "provides" mostly stuff you don't want to see (and frequently don't have the option to not watch, if you're viewing any of their content, ie: commercials).
I'd rather see independent producers distributing their content over various netflix-like providers, otherwise we're just transplanting our current content production model to the web. That will suck for both consumers and producers.
There's a big difference between a company like Netflix producing their own content, making it available for watching uninterrupted, whenever you like -vs- any of the content providers that charge cable companies for their content streams that include commercials and are generally not available "on demand", packaged together through a single company that won't give you just the content you want, when you want it, but charges you for some combination of provider's streams in a package.
Hence the argument of "the alternative is having to pay $100/month for a cable subscription to watch garbage you don't want to see". 5x7.99 is not the cost of cable. The only cable packages you can get for that price are extremely limited. Also, they will require another $4.99 a month for on-demand, on top of your regular cable fee, unless you're paying more than $100 a month, in which case, it's included. ¬.¬
Wouldn't it be better if prices for the content you want were more reasonable? Like, if you could buy a season of House of Cards for $7. And buy an old movie for $0.25?
I'd like to buy a new porsche for $10k but that's not happening either.
Most of Netflix's shows cost over $4M an episode[1]. Taking that as a base you've got a cost of $48M a season (these are production costs not total cost, at $7 a season you need 7M subscribers just to break even ). Considering most shows have less then 4M viewers a night your pricing model pretty much is just throwing money away.
1. http://www.businessinsider.com/netflixs-cost-for-house-of-ca...