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Netflix and the Prisoner’s Dilemma

Netflix is currently a top streaming site to watch TV shows and movies. They have 118 million subscribers to their services, and are continuing to grow rapidly. There has been talk about Netflix and other TV/Movie companies being in a prisoner’s dilemma type situation. Since Netflix is so large, a lot of companies like to give rights to their content to Netflix in exchange for a large sum of money. The problem is, Netflix buys shows two seasons at a time, and most companies want to test a pilot season with Netflix before allowing them to use more seasons. If the companies decide not to sell to Netflix in order to protect the guaranteed longevity of their shows, they will have to look elsewhere and likely make much less money. The article says the dilemma is that companies can either sell to Netflix for quick profit, or not sell to Netflix to protect the industry.

The prisoner’s dilemma relates to this class because it requires knowledge about Nash equilibrium. In order to know what the other players in a game will do, you need to consider the Nash equilibrium and decide whether the outcome for you is beneficial enough to make certain decisions. This Netflix issue has been described as a prisoner’s dilemma situation and it is not hard to see why. I personally think that as a company trying to build themselves, one should sell content to Netflix because their user-base is immense. We can’t be sure what will happen to the industry in the long term but it is a risk many companies will have to take.


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