Are they losing money? If you canabalize your existing revenue stream by destroying distributor relationships in exchange for a new revenue stream that is tiny, you will lose money. Contrary to popular belief, most of the people making lots of money as executives are not stupid. They just have more data than the arm-chair quarterbacks have. What seems 'obvious' to us hackers is not always as clear cut when you have the numbers in front of you.

I am sure they do. But they have to rely on such distribution deals to make most revenue. They won't be able to distribute via main stream mediums like movie theaters and TV channels on their own because of extensive offshore logistics.

They get money from ads, and what ad company will pay for users outside of their market? Ad-free is wasted bandwidth.