Netflix CEO Reed Hastings got himself and his company into some trouble last summer. Hastings used his personal Facebook page to reveal the fact that Netflix users spent 1 billion hours in front of streaming videos in June. Critics said this information was valuable to shareholders and would have been more appropriate in a more traditional medium such as a press release or an SEC filing.
The SEC took a look, decided to allow social-media postings to carry investable information -- and Hastings is back on Facebook again. This time, the news is that Netflix users streamed 4 billion video hours in the first quarter of 2013
Netflix exists because they do not have to pay for the infrastructure required to deliver their service. It is totally free to them. Ultimately consumers pay, but also companies such as Comcast who is subsidizing their competitor.
But it's also true that the relatively low cost and low effort (using software like Adobe's TV Everywhere) to enter the video streaming business ensures more competitors pop up fast. These competitors offer free streaming and target special groups.