Business
Delaena Kalevor – Why the “Breakage” Model is Profitable But Could Prove Unsustainable

I would like to introduce readers to a concept called “breakage.” It’s a common business strategy in fee-based or subscription-based services, such as gym memberships, video rentals, and annual fee credit cards. It’s also common in loyalty rewards programs.
Before I discuss this concept, I want you to think of how most businesses operate. The customers want a particular product or service. They buy it. They use it and the transaction is complete.
Let’s consider a basic example:
Let’s assume that you’re hungry and you want a bacon burger.
You go to the drive-through and buy a burger. You eat the burger.
You’re happy because you’re no longer hungry.
The drive-through franchise owner is happy because they generated a sale. This is how most businesses work.
The “breakage” model works the exact opposite way. With breakage, the company makes money when you do not use the product or service you purchased.
Let’s look at the gift card business for example: Let’s assume you buy a $25 gift card from Amazon.
You give the gift card to your friend for his birthday. How does Amazon make any money doing this?
Well, it turns out that for every $100 spent on buying a gift card, only $75 is actually ever redeemed. People who receive the gift card either lose the card, forget about the card, don’t use up the entire value of the card or the card expires.
This is breakage. Gift cards have an implied breakage of 25%. Meaning on average 25% of the value of gift cards never get redeemed. According to Delaena Kalevor, breakage can be very profitable. When someone purchases a gift card, the issuer of the gift card recognizes the gift card value as a contingent liability on their balance sheet. When the gift card value expires, the contingent liability is taken off the books and recognized as revenue. This has a direct accretive impact on net income, which can make breakage in the gift card and loyalty rewards industry extremely profitable.
The cashback and loyalty programs of credit card issuers also work in the same way and breakage is a valuable part of how these banks make money. They use tools like redemption caps (for example with American Express, you can’t redeem until you have $75 worth of points), points expiration, etc to enforce breakage. Most customers never reach that $75 redemption threshold before the points expire. This is an example of breakage. That’s why Delaena Kalevor’s favorite credit card is Discover Card. They have no breakage at all – no redemption caps and no points expiration.
Another example of breakage is health clubs or gyms. The parallel to that in the credit card industry is cards that have an annual fee.
Most fitness centers work on a monthly membership fee model.
I pay $50 a month to have access to the facility.
Whether I show up every day or never show up, I still pay the health club the same $50.
In the health club business, by far the most profitable customers in the industry are people who sign up as members but don’t actually show up to the gym.
This is also breakage. Similarly, credit card customers with an annual fee credit card, generate breakage income for the issuing bank when they do not use their card.
Breakage-based business models can be very profitable. Imagine a health club with 10,000 paying members where nobody actually shows up.
The problem with breakage business models is that you’re receiving value from customers without customers actually receiving value in return. Basically, you’re betting that customers are too lazy to recognize this.
Before Netflix and video streaming of movies became popular, a company called Blockbuster used to rent DVD movies to entertainment seekers. You would rent a movie for two nights for something like $5. If you forgot to return the movie on time, they would charge you a $3/day late fee.
Imagine renting five movies for the weekend and forgetting to return the movies for an entire week. Instead of spending $25, you end up spending $100.
This is a form of breakage too. In fact, at its peak, Blockbuster was generating 70% of its net income from late fees. Their profits came from customers who were too lazy or forgetful to return the DVD sitting in their car.
The problem with breakage though is that customers DO NOT like it.
When Netflix first started, they had a subscription-based DVD rental by mail business. For a flat fee each month, you could keep the movies you rented for as long as you wanted.
According to Delaena Kalevor, Netflix targeted Blockbuster’s most profitable customers — those that pay late fees — and ultimately put Blockbuster out of business.
Personally, I prefer a business where sales and profits come from happy customers, instead of unhappy ones that wish your way of business didn’t exist.
I don’t see the gift card, loyalty rewards, and health club businesses going out of business anytime soon. I don’t even expect their breakage business model to change. But Delaena Kalevor likes the idea of customers receiving good value for what they pay. The value should be mutually beneficial, like in the burger example. It’s a good thing to profit from really happy customers that are thrilled to do business with you. Blockbuster did not expect to go bankrupt. But they did. History has a funny way of repeating itself. The breakage based businesses out there should take lessons from Blockbuster’s experience.
Business
What to Look for in an Enterprise Webcasting Solution

The modern workplace doesn’t stand still. Teams are global, employees are remote, and companies must communicate faster and at scale. That’s why enterprise webcasting has gone from a niche tool to an essential part of internal communication strategies.
Reliability is the starting point when broadcasting to hundreds or thousands of employees, stakeholders, or partners. The platform you choose needs to deliver more than a stable video feed; it must offer security, accessibility, scalability, and real engagement.
For enterprises navigating this decision, here’s what to consider before committing to a webcasting platform.
Scale and Performance Matter More Than You Think
It’s one thing to host a video call with your immediate team. It’s another to run a high-stakes webcast for your entire global workforce. Enterprise webcasting means reaching large, often geographically dispersed audiences, sometimes tens of thousands of people at once. And when that’s the case, performance isn’t negotiable.
Your platform should offer proven scalability with minimal lag, buffering, or outage risk. Many organizations underestimate the bandwidth and technical infrastructure needed to deliver seamless webcasting at scale. Look for solutions that utilize global content delivery networks (CDNs) and redundant systems to guarantee smooth streaming, regardless of your viewers’ location.
The reality is, your message only lands if the technology holds up under pressure.
Security Isn’t Optional
In a world of growing cyber risks and data privacy concerns, security must be front and center, especially for enterprise webcasts. Not every message is meant for public ears, from internal town halls to sensitive investor briefings.
Leading webcasting platforms provide enterprise-grade security features like encrypted streams, password protection, login authentication, and customizable access controls. Depending on your industry, you may also need to meet specific regulatory requirements for data protection and compliance.
Ultimately, your webcasting solution should provide peace of mind, knowing that confidential information stays where it belongs.
User Experience Makes or Breaks Engagement
Let’s face it: no one wants to wrestle with clunky software minutes before a big company update. The best webcasting platforms make life easy for both presenters and attendees.
Intuitive interfaces and simplified workflows reduce stress and help presenters focus on delivering the message. The process should be frictionless for attendees, with one-click access, mobile compatibility, and no need for complicated installations.
But accessibility isn’t just technical, it’s also about inclusivity. Your platform should offer features like captions, translations, or on-demand playback options to ensure your workforce can engage with the content.
Because if people can’t easily join or follow along, your webcast risks becoming background noise.
Engagement is More Than Just Showing Up
In enterprise settings, communication can’t be one-way. True engagement requires interaction.
Modern webcasting solutions offer features like real-time Q&A, live polls, and chat functions to turn passive viewers into active participants. These elements keep audiences focused and create opportunities for meaningful feedback.
Especially for company-wide meetings or virtual events covering important updates, giving employees a voice makes the experience feel collaborative, not just another broadcast.
Data and Insights Drive Improvement
One of the most overlooked aspects of enterprise webcasting is analytics. But without data, it’s impossible to measure success or spot opportunities for improvement.
Look for platforms that provide detailed reporting, including attendance metrics, engagement rates, audience locations, and performance benchmarks. Over time, these insights help refine your communication strategy, adjusting formats, reworking content, or targeting specific groups with follow-up resources.
The more visibility you have into how people interact with your webcasts, the better equipped you are to make those events impactful.
Flexibility for Different Event Types
Not all webcasts are created equal. Some are formal, high-production events with large audiences. Others are more casual, interactive sessions for smaller groups.
The platform you choose should give you the flexibility to manage both scenarios. Whether you’re hosting a polished executive briefing, a technical product demonstration, or a virtual town hall, the tools should scale to fit your needs, without requiring entirely different systems or workflows.
Many providers also offer managed services for high-profile events, giving you access to technical experts who handle the backend so your team can focus on the message.
Final Thoughts
Webcasting has become a critical tool for modern businesses, but choosing the right platform requires more than just comparing price tags. It’s about finding a solution that delivers reliability, security, engagement, and scalability while making the process simple for both your team and your audience.
With enterprise webcasting, companies can ensure their most important messages are delivered securely and at scale, whether to employees down the hall or stakeholders around the globe.
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