Netflix has used the long tail in the DVD-by-mail business to its advantage, crafting a business model that creates close ties with film studios. What do film studios stand to gain from taking advantage of the Netflix model targeted at increasing the firm's long-tail offerings?
A) Discounted fees for marketing some of the less-popular titles from the studios
B) A cut of the subscription revenue from every disk sent out by Netflix
C) Greater bargaining power with movie rental firms such as Netflix, Blockbuster, and Wal-Mart
D) Lower costs related to screening movies in cinemas by releasing them straight on DVD
E) An equal share of revenue from the digital distribution model through online streaming

Question

Quizplus · Accepted Answer

Film studios gain a cut of the subscription revenue from every disk sent out by Netflix, which incentivizes them to provide a wide range of titles, including less-popular ones, thus benefiting from the long-tail model.

Netflix Has Used the Long Tail in the DVD-By-Mail Business