The free companies do not advertise. NFLX saturation advertises and that is why they grow. If they stopped advertising they would die shortly after. Once others figure out that advertising is the key and we see NFLX crowded out of their typical advertising slots then the landscpe will change quickly. Right now others are seeing if NFLX can make money ... and so far they cannot (if you go beyind the hype).
When you get to the basics of it, Netflix is nothing but an automated distribution company (or maybe just a retail outlet). They have to pay for what they distribute and they charge the customer for what they order. To survive over the long-term they have to keep in stock the things people want to watch. Many times distribution companies will have their own private label, but sometimes that backfires when suppliers see them as competition. However, the core competence of distribution or retaill is not creation.