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Estimationstandard
Estimate Netflix's annual subscription revenue in the US.
How to approach it
Estimate paying US households, then multiply by an average monthly price across plans.
How a strong answer opens
“I'll estimate paying US households and multiply by an average monthly price across plans, including the cheaper ad-supported tier.”
Outline of a strong answer
Try answering out loud for a few minutes before you open this.
- Households, about 130 million
- Share subscribing
- Average monthly price across plans
- Revenue = subscribers x price x 12
- Adjust for discounts, bundles and ad-supported plans
- Sanity-check: revenue per US household per year versus other streaming spend
Where this question usually goes wrong
Using the top plan price for everyone, or ignoring ad-supported and bundled plans that lower the average revenue.
Learn the method
Top-down and bottom-up in Module 3, Estimation.
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