Match Netflix profit; derive required subscribers

Q: Match Netflix profit; derive required subscribers

This question evaluates algebraic modeling of subscription profit and break-even analysis, testing understanding of fixed versus variable costs, unit consistency, and proportional scaling of subscriber bases in the Statistics & Math domain.

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Question

Subscription Profit and Break-even (All Monthly)

Assume all figures are monthly and "M" denotes millions.

We model subscription profit as:

Profit = Subscribers × (p − v) − F
- F = fixed cost (USD/month)
- p = price per subscriber (USD/month)
- v = variable cost per subscriber (USD/month)

Given earlier: F = $100M, p =$ 9, v = $4. Define "Netflix" as having a subscriber base equal to 4× the break-even subscriber count under those economics, using the same F, p, v.

Tasks: (a) Compute Netflix’s monthly profit.

(b) Now consider your startup with F' = $150M (treated as fixed cost this month), v' =$ 4, p' = $15. How many subscribers do you need to match Netflix’s monthly profit? Show all algebra and units.

Match Netflix profit; derive required subscribers

Subscription Profit and Break-even (All Monthly)

Solution

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Match Netflix profit; derive required subscribers

Overview

Subscription Profit and Break-even (All Monthly)

Solution

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