Re:Netflix never used its $1M algorithm (2012)
by PaulHoule on Wednesday January 10, 2024 @06:44PM
(#38945262)
The transition from not needing a license (mailing discs) to renting content to owning it was intrinsic in their business plan all along.
They saw that streaming was the future but that mailing discs would let them build a big brand early on, but they took the disc market very seriously and optimized it.
Once you're streaming the cost structure is like this: Fox or Disney or someone like that will charge them $X /month/sub but it costs $Y to create a piece of content, independent of how many subscribers you have. There is a crossover point where you have enough subscribers that it makes sense to own.
They saw that streaming was the future but that mailing discs would let them build a big brand early on, but they took the disc market very seriously and optimized it.
Once you're streaming the cost structure is like this: Fox or Disney or someone like that will charge them $X /month/sub but it costs $Y to create a piece of content, independent of how many subscribers you have. There is a crossover point where you have enough subscribers that it makes sense to own.