Assessing a Transactional Rental and Paid Live Event Business for Netflix
Company: Netflix
Role: Product Manager
Category: Product Design & Strategy
Difficulty: medium
Interview Round: Other
Netflix makes its money from monthly subscriptions, with and without ads, that give members its whole catalog at no extra charge per title. You are asked whether Netflix should also enter the pay-per-view or transactional video-on-demand business, in which viewers pay separately to watch a particular title or event. Make a recommendation and explain how you reached it.
```hint Check what it does to the subscription
Weigh any new revenue against what charging per title could do to how much the subscription seems worth to members, and ask which kinds of content, if any, would justify a separate charge.
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### Clarifying Questions
- Does pay-per-view here mean one-off live events such as fights or concerts, new films offered as paid rentals before they join the subscription, or a full store for renting and buying titles?
- Would paid titles be sold only to subscribers as an add-on, or also to people who do not subscribe?
- Which goal matters most to leadership: new revenue, subscriber growth and retention, or access to content Netflix cannot currently offer in the subscription?
- Is this a global decision, or should it start in particular markets?
### What a Strong Answer Covers
- Netflix's current business model and goals, and how a pay-per-title business would or would not serve them.
- A clear definition of the possible options, each evaluated on its own merits.
- The effect on members: the perceived value of the subscription, churn, and the promise that everything is included.
- Competition, economics including rights costs and cannibalization, and what Netflix would need to build or operate.
- A clear recommendation with a way to test it, success metrics, guardrails, and the conditions that would change the decision.
### Follow-up Questions
- Netflix can stream a major boxing match. Should it be pay-per-view or included in the subscription, and why?
- If you tested paid rentals, how would you design the test to measure the effect on churn and on viewing of included titles, not just rental revenue?
- A studio offers Netflix new theatrical films for paid rental only, never for the subscription. How do you evaluate the deal?
Overview: A product strategy question asking whether Netflix should add a pay-per-view or transactional video-on-demand business alongside its subscription. It tests defining the options, weighing new revenue against subscription value, churn and brand, judging competition and economics, and making a testable recommendation.