Comments on: Netflix Avoids the Sunk Cost Fallacy http://dmarron.com/2009/09/28/netflix-avoids-the-sunk-cost-fallacy/ Musings on Economics, Finance, and Life Thu, 24 May 2012 19:06:33 +0000 hourly 1 http://wordpress.com/ By: Netflix (NFLX) and the Benefit of Flip Flopping — Clearing and Settlement http://dmarron.com/2009/09/28/netflix-avoids-the-sunk-cost-fallacy/#comment-7021 Tue, 11 Oct 2011 13:57:00 +0000 http://dmarron.com/?p=1804#comment-7021 [...] Player–just weeks before its scheduled launch. I take that as a sign of great leadership. As I wrote two years ago: Reed Hastings is not a man who gets locked in by sunk costs: he’s willing to kill projects … [...]

]]> By: Luise Juhasz http://dmarron.com/2009/09/28/netflix-avoids-the-sunk-cost-fallacy/#comment-2593 Tue, 06 Apr 2010 12:53:59 +0000 http://dmarron.com/?p=1804#comment-2593 Test & Keep your iPad for Zero cost! -> http://bit.ly/cFBuis

]]> By: Change me (Part 2) « PEG http://dmarron.com/2009/09/28/netflix-avoids-the-sunk-cost-fallacy/#comment-1174 Mon, 12 Oct 2009 22:40:43 +0000 http://dmarron.com/?p=1804#comment-1174 [...] In short, Reed Hastings [CEO of Netflix] is not a man who gets locked in by sunk costs: he’s willing to kill projects (or, in this case, spin them off) even if he’s got years invested in them. A good example for my students when we discusses costs in a few weeks. And just another example of the strengths of Netflix’s culture. Netflix avoids the sunk cost fallacy, Donald Marron [...]

]]> By: Donald Marron http://dmarron.com/2009/09/28/netflix-avoids-the-sunk-cost-fallacy/#comment-1052 Tue, 29 Sep 2009 19:32:17 +0000 http://dmarron.com/?p=1804#comment-1052 Yes on your last point in particular. Managing a decline well strikes me as an under-appreciated talent with all the (understandable) focus on growth.

]]> By: chappy http://dmarron.com/2009/09/28/netflix-avoids-the-sunk-cost-fallacy/#comment-1051 Tue, 29 Sep 2009 14:46:40 +0000 http://dmarron.com/?p=1804#comment-1051 Well, this is a good story, but, even as a devoted Netflix subscriber, I have my doubts about the companies long-term viability. The Netflix catalog of on-demand downloads is somewhat lacking. I have every confidence that they are trying their best to improve this catalog (and indeed it has improved), but I still think that new releases will be hard for them to come by and the big studios will make it expensive or impossible for them to ever deliver these films electronically. Now maybe Netflix has a niche as a ‘second best’ offering.

I agree that your post shows that the Netflix management is able to understand that sunk costs are only a part of long-run profitability question, but I think what is more impressive is when managers can manage decline.

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