Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video
1–10 of 44 posts
Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video
#2I guess Bezos is really serious when he tells shareholders his company is willing to not maximize profit in the short term for long term investments.
Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video
#3It's ok, they'll make it up in volume.
I'm only half joking, the fact that PRIME is part of their retail sales program means that they do make more sales to PRIME members. If their deals for content are cheap enough, it could work without significant changes... eventually.
I'm just amazed that they are able to do this for so long. Their P/E (in profitable quarters) is astronomical.
Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video
#4This sounds somewhat bizarre. For physical goods it made sense as you had to build big expensive distribution centres. This means big fixed costs and low variable costs.
For streaming video delivery the fixed costs are almost zero while the variable costs are proportional to the amount of video watched.
The article that the deals Netflix and Amazon do with the content providers are fixed cost deals - ie pay a certain amount of money no matter how many or how few customers watch the content. If they are variable costs deals (per view) then it would be mostly insane doing them for more revenue that you get from the viewers.
Does anyone know how these content deals are structured in terms of fixed amounts versus per view amounts?
Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video
#5This sounds somewhat bizarre. For physical goods it made sense as you had to build big expensive distribution centres. This means big fixed costs and low variable costs. For streaming video delivery the fixed costs are almost zero while the variable costs are proportional to the amount of video watched. The article that the deals Netflix and Amazon do with the content providers are fixed cost deals - ie pay a certain…
I imagine there are various fixed and variable parts to some of these deals (no inside knowledge).
Imagine though that you are selling exclusive rights to your catalog for a fixed period of time (say 2 years). You would want to maximise revenue while managing risk. As a content provider you may not have sufficient information to figure out what the likely number of views will be in two years times as there are multiple factors you don't have much historical data on (viewer behavior, projected growth rate). Fixed bids are a lot easier to compare than comparing how you think Amazon Instant and Netflix growth rates and customer behavior will change over time.
Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video
#6This sounds somewhat bizarre. For physical goods it made sense as you had to build big expensive distribution centres. This means big fixed costs and low variable costs. For streaming video delivery the fixed costs are almost zero while the variable costs are proportional to the amount of video watched. The article that the deals Netflix and Amazon do with the content providers are fixed cost deals - ie pay a certain…
Building and staffing data centers is a non-trivial fixed cost required to run a streaming video service.
Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video
#7Personally, my use of Prime is significantly different than Netflix.
I've rarely used Prime free content, but I have rented a number of recent movies and "bought" a few recent seasons of TV shows.
Off the top of my head, Amazon has collected more cash from me for video streaming in the last 6 months than Netflix, but I've been consuming probably 10x more data from Netflix.
I wonder if / how Hastings comparison accounts for this?
Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video
#8> Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video
I'm skeptical.
This posits that Amazon is spending about 1/4-1/2 of what Netflix spends (Netflix on track for $2.1 billion this year), to stream about 1/20th as much (Netflix 33% of internet traffic, Amazon 1.8%), from a greatly inferior content catalog.
I think Bezos & Co. can cut better deals than that.
Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video
#9[deleted]
Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video
#10Doesn't a large portion of Netflix's infrastructure run on top of Amazon Web Services? Why doesn't the article clarify that?
I think Amazon is not losing money at all. They're supplying a really big customer with resources and selling at retail as well.