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Module Three Checkpoint Assignment

The document discusses Netflix's position in the streaming market, noting its 227.65 million subscribers and competition from other services like Prime Video and Disney+. It highlights factors affecting supply and demand, such as technology, production costs, price, and variety, as well as the price elasticity of demand influenced by alternatives and luxury status. Despite fluctuations in subscriber numbers due to price increases, Netflix has maintained its revenue and market leadership since 2011.

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2 views4 pages

Module Three Checkpoint Assignment

The document discusses Netflix's position in the streaming market, noting its 227.65 million subscribers and competition from other services like Prime Video and Disney+. It highlights factors affecting supply and demand, such as technology, production costs, price, and variety, as well as the price elasticity of demand influenced by alternatives and luxury status. Despite fluctuations in subscriber numbers due to price increases, Netflix has maintained its revenue and market leadership since 2011.

Uploaded by

cmixon1237
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Module Three Checkpoint Assignment

Crystal Mixon

Southern New Hampshire University

ECO 201: Microeconomics

Professor Prudhont

May 31, 2025


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Introduction

Netflix is a streaming company that has been around since 1997 but has been offering

streaming services since 2007. Netflix provides streaming services to people in multiple

countries. They have subscriptions that customers can pay each month. “An estimated 31% of

users do not pay for the platform.” (Business of Apps, 2025)

Supply and Demand

Netflix has been the top streaming service with over 227.65 million subscribers

worldwide. In 2020 Netflix was on top in the streaming services with their competition being

Prime Video, Disney+, HBO Max, Peacock, and Paramount who just started. Over the years

Netflix remained on top amongst the other streaming services. Due to all the streaming service

providers, it caused a “strain on Netflix’s growth, with 2022 seeing the first declines in

subscribers in the North American market.” (Business of Apps, 2025) The demand for streaming

services has increased over the years.

Two determinants of supply would be technology and production costs. “One area where

Netflix has excelled is in its use of data and machine learning. The company’s recommendation

algorithm, which drives 80% of content discovery on the platform, is a prime example of how

Netflix leverages technology to improve its service.” (Lino, 2024) Production cost is another

supply determinant because Netflix doesn’t pay for actors and sets, they purchase the movie/tv

show for a set price. Two determinants of demand would be price and variety. Netflix provides a

subscription at a reasonable price to where they keep their customers happy while also having a

variety of movies/tv shows. Variety being the second determinant for Netflix “with 3,600+

movies and 1,800+ TV shows available to subscribers.” (Just Watch)


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Price Elasticity

Two determinants of price elasticity of demand for Netflix would be alternatives and

luxury. Netflix has multiple alternatives like Prime Video, Hulu, Peacock, and Paramount that

make Netflix elastic because customers have other options. Luxury is another determinant

because Netflix is not a necessity, it is something that a customer wants to pay for to watch a

movie or a TV show.

Netflix subscribers in US & Canada went down from 75.2 million in 2021 to 74.2

million in 2022 due to subscription prices increasing and other streaming services, this is a sign

of elasticity. In 2023 Netflix raised their prices again but this time their subscriptions increased

to 75.5 million, this is a sign of inelasticity.

“The price elasticity of demand measures how much the quantity demanded responds to

a change in the price.” (Mankiw, 2024) Netflix doesn’t seem to be affected very much when they

change prices or when other competitors are out there. Netflix has remained on top amongst the

other streaming service providers. There has not been a decrease in any revenue for Netflix as far

back as 2011.
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References

Lino, G. (2024, October 2). Netflix subscriber trends 2024: In-depth analysis. Giro’s Newsletter.

https://www.girolino.com/the-current-state-of-netflix-subscribers-trends-and-figures/

Mankiw, N.G. (2024). Principles of economics (10th edition). Cengage.

Netflix - full list of movies and TV shows online. JustWatch. (n.d.).

https://www.justwatch.com/us/provider/netflix

Netflix revenue and Usage Statistics (2025). Business of Apps. (2025, February 21).

https://www.businessofapps.com/data/netflix-statistics/

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