> That trick only works once and then they're right back to where they were with zero growth

Yep, it just kicks the can down the road, but it might kick it ten years down the road.

One of Netflix's big problems is that they're really just HBO, but with more subscribers. As we're both talking about, they have some limits on their growth. At the same time, people have generally thought of them like a tech company.

> Netflix (and most companies really) shouldn't expect or aim for endless growth. They should just strive to make a healthy profit and sustain that over time.

The problem is that's extremely hard to actually do. People say this all the time, but often don't think about what it means. The problem is that if you're not trying to grow and change, usually someone comes along and pulls the rug out from under you. 1990s/early-2000s HBO could be described as happy with its premium-cable position and not needing to go for big growth. They would grow as the population grew. Except then Netflix decides to make a huge play: invest in tons of content and a big new streaming platform. Now Netflix starts taking over that space and taking a bigger share of the dollars being spent on video entertainment.

The problem is that customers aren't going to be loyal to a zero-growth, steady-profit company. Someone is going to come along and offer something that might be better - and if you aren't growing and investing, it's easy to get left behind. There's often a bear behind you and you need to keep running.

In fact, when Netflix launched its streaming service, it knew that it had to grow into a content producer and not simply a streaming service. Netflix could have said "we're so happy you love our streaming service, we'll just keep licensing whatever content we can for your subscription fees minus a cut for us." The company would have died. Licensing costs would go up, content producers would launch their own services like Disney+ and HBO Max, and customers that loved Netflix at the start would have left the service.

In fact, Netflix had to grow. Netflix had 7.5M subscribers when streaming started. 3 years later that was 20M. If Netflix didn't grow a lot more, they wouldn't be able to produce the amount of content that would keep customers around. 20M subscribers at $8/mo (the 2010 price and subscriber count) would be $1.9B in revenue per year. Netflix is spending $17B on content per year to keep their subscribers.

Maybe you argue that yes Netflix had to grow back then, but when you're Netflix's size now they could go zero-growth and allow sharing. But what happens when another company sees an opening to eat short-term losses building up a large content catalog on a non-sharing platform? Let's say I can get as much VC as I need and I build up an amazing catalog of content spending $40B per year on content and $8/mo service, but no account sharing on my service. I have way more and better new content than Netflix. I've seen the weakness in Netflix's business model (account sharing) and I've "solved" that issue by disallowing it from the start. Netflix subscribers start canceling (so they're now negative growth) and when my service feels established I can start raising prices to $10, $12, and $15 as time goes on and I've achieved 120M US/Canada subscribers instead of just 74M. Yes!

Zero-growth can certainly work for a while. At some point, it's hard because someone will attack that weakness and you'll end up with negative growth. Maybe what you were originally known for becomes just a feature. How many pieces of software have just become features of your OS? https://en.wikipedia.org/wiki/Sherlock_(software)#Sherlocked.... If Netflix hadn't pursued growth and invested heavily in content to fuel growth, their product (the streaming platform) would simply be copied by competitors who would then have better economics over the content. Heck, all the content companies that didn't invest in streaming saw Netflix eat their lunch for a time.

I think too many people have this idea that you can easily run a stable business with stable healthy profits, but that there's this insane compulsion toward growth. The problem is that there's always others coming to eat your lunch and customers aren't going to be loyal to you as a company. If Netflix hadn't invested in growth, someone else would have and then offered more and better content and then everyone would scream "why isn't Netflix offering as much good stuff as OtherFlix?" Well, you wanted Netflix to be focused on zero-growth stable profits and so another company came along and got better economics so they could offer more to customers than Netflix could.

Right now, Netflix has the most subscribers and that gives them the best economies of scale in the industry. Others are starting to catch up and could become larger if Netflix doesn't keep growing. At that point, it will be harder for Netflix to retain customers since they'll have less money to spend on content than competitors. Yes, we can complain all day about Netflix's content, but they still have the best subscriber count to create content with. That's a huge advantage in retaining subscribers - and an advantage they might lose if they go for zero-growth.