I think this is a vast overestimation. The majority of people notice every payment they make every month, a Netflix subscription is a choice that they would not continue to make if they were not using Netflix. Those of us who can afford to pay Netflix whether we watch it or not are the minority of wealthy people. I think you would be surprised to learn how many normal people juggle different subscriptions by cancelling/subscribing each month.

I have personally met people who, like me, really don't have cash to splash; but who, unlike me, and to my surprise, have literally told me "I pay for all the streaming services every month, whether I use them or not, there's no way I could be bothered to cancel/re-subscribe". So, from my limited anecdotal experience at least, no, it's not a vast overestimation, and in fact it's probably often not about how wealthy people are either - it's about how many people out there are willing to pay for the privilege of set and forget, rather than having to think about one more thing on a regular basis.

I think both statements are somewhat true. And we can look to COVID to see some evidence of this because when everyone was suddenly home and wanting to consume TV, Netflix had to lower the bit rate on even their premium tier to keep up with demand.

If Netflix wasn’t relying on a degree of inactivity with in their infrastructure then they wouldn’t have needed to lower the bit rates.

It makes sense, when you think about it. Over provisioning is a common practice when dealing with expensive finite resources. For example ISPs have been doing this for decades, offering households higher individual bandwidth than is available if every household within a local radius was to fully max out their throughput. VMWare also offers this to allow individual VM to consume more RAM than the total available on the host.

The key is not to over provision so much that it becomes noticeable under “normal spikes” — and I think we can all agree that COVID was anything but normal.