Vimeo finally explains why it’s not launching its own version of Netflix

Vimeo spent years insisting that it was going to launch a subscription video service just like Netflix, YouTube and many others. Then, in June, IAC’s video unit abruptly announced that it wasn’t going to do that, after all.

What happened? IAC never formally explained, but it was relatively easy to guess: IAC’s Barry Diller and his lieutenants decided that it would be really expensive to compete with Netflix, YouTube and many others.

Today, IAC offered a formal explanation, which you can read below. Tl;dr: They decided it would be really expensive.

Here’s the relevant portion from IAC CEO Joey Levin’s shareholder letter, attached to the company’s earnings report:

“We have some competitive advantages at Vimeo, but as we got deeper into the execution and saw what [launching a subscription service] would require, and the compromises we would need to make in our mission to empower creators, the strategy started to look more and more like our competitors, and less and less like Vimeo.”

So that makes some sense. Although it doesn’t explain why Vimeo thought otherwise for years. During the company’s last earnings call — just three months ago — Levin was talking up plans for the service.

Now Levin is talking up Vimeo’s existing business, which turns out to be just fine: It has 828,000 people paying an average of $100 a year to use the free service’s pro-sumer tools. So they’ll keep working on that.

Meanwhile, if you’re into reading entertaining/passive-aggressive shareholder letters, you should read all of the one Levin published today, where he complains that investors aren’t properly valuing the conglomerate he runs.

His argument: IAC has lots of interesting businesses — like Vimeo — but investors only seem to care about its stakes in Match/Tinder and Angie’s List.

Money quote: “It’s an absurd outcome given that these businesses are clearly neither worthless nor even a cash drain — they are in aggregate profitable and growing, but such is the message from the market right now.”

This article originally appeared on Recode.net.

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