When Netflix first started, they were able to buy the streaming rights to old movies and TV shows for cheap, because executives thought they weren't worth anything. Now those contracts are expiring, and the studios want to jack up the rates or start their own service.

Netflix is also getting squeezed by ISPs like Comcast, who want to charge them for the right to deliver video to Comcast's customers who already paid for their bandwidth.

So Netflix' only way to survive is to develop its own content. If it's dependent on other people to provide content, they'll jack up their prices to take Netflix' profit margins.

So now you have 5-10 competing services, and if you aren't paying attention, you don't know what shows are available on what service. Meanwhile, if you go to a file-sharing website, you can get every single show and movie. So Netflix (and its competitors) have less compelling of a value proposition, if you have to pay $10/month to several different services to get all the shows you might want to watch.