this post was submitted on 30 Jan 2024
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There was multiple mess ups from many different places. Netflix making their own content was just an excuse.
First off the government allowed consolidation of the studios. All of the buyout and mergers reduced the number of players.
Netflix, video stores, and theatres before them were/are distributors. They did not create any products but acted as a local point of sale.
A distributor only makes sense when the producers and customers have a high level of segmentation and they can't economically or efficiently connect directly. When the producers are consolidated enough, cutting out a distribution network in an attempt to generate more profit is inevitable. It never works out as expected.
In general the producers can not offer the level of service that the distributor did. So the customer always suffer from a decline in service. It also always becomes more expensive for the customer with shittier products. The producing companies try to make up for losses in revenue from sales with lower quality cheaper product.
Now if the government had blocked the studio consolidation we would have likely have seen the rise of distributor competition. Distributor competition is very, very good for the consumer. When multiple companies are offering the same product but offering differing levels of service the consumer benefits.
The producers if they are smart make the same amount of money from all of the distributors and focus on making high quality products they can sell at a premium.