Earlier quoted context omitted.
WRT Netflix, their stated strategy was that their access to data was going to allow them to create superior content as demonstrated (at least for a time) by House of Cards.But it became evident pretty quickly that 1.) The beast needs to be fed with quantity as well as quality (as you say) and 2.) Quality TV/film isn't just an algorithmic exercise.
You can have the best 3 shows on any platform, but if all you have is 3 shows, people won't sign up or stay. Netflix had to invest in quantity side by side with quality because the content providers started taking their ball and going home.
But if your licensed content is mostly drek, you have to create filler content yourself, even if it's mostly just OK.