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Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video

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Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video

#11

Post by scott_s »

incision wrote: post #7

Personally, 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 accoun…

This is my usage exactly. I won't rent through Sony because they impose a 24 hour period - I rarely have two consecutive hours to spend watching a movie any given day. Amazon uses a 48 hour period, which I can live with.

Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video

#12

Post by sliverstorm »

kbutler wrote: post #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.

Netflix 33% of internet traffic

Numbers like that give me pause. I can kind of see where the anti-Network Neutrality folks are coming from.

Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video

#13

Post by elq »

incision wrote: post #7

Personally, 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 accoun…

Reed's point is, I assume, that Amazon is paying/will pay approximately $1B to license content for prime streaming, not ppv content.

Is the availability of prime streaming a factor in you choosing Amazon PPV vs, say, Apple?

Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video

#14

Post by scott_s »

riledhel wrote: post #10

Doesn'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.

Amazon providing Netflix with infrastructure does not figure in. The estimate (which I agree is suspect) has to do with the cost of acquiring content rights. If Amazon is spending more money on content rights than they pull in from users consuming that content, then they're running their streaming service at a loss. Netflix running on their hardware doesn't factor in.

Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video

#15

Post by wpietri »

kbutler wrote: post #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.

How would he do that?

Hastings says the estimate is based on head-to-head competition. If I'm selling streaming rights for property A, I'm going to go with the people who pay me the most. If Bezos says, "But gosh, we aren't showing it to as many people," my answer will be "Tough!"

Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video

#16

Post by tsotha »

Reid is saying Amazon is paying half of what Netflix is paying for a tiny fraction of the latter's catalog and an even tinier fraction of Netflix's volume? If that's what he's saying I'm hard pressed to think he actually believes it.

Also, Amazon can afford to lose a bit (probably not a billion, though) on its streaming service if 1) more people sign up for Prime as a result and 2) Prime members buy more inventory from Amazon.

Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video

#17

Post by wpietri »

sliverstorm wrote: post #12
kbutler wrote: post #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.

Netflix 33% of internet traffic Numbers like that give me pause. I can kind of see where the anti-Network Neutrality folks are coming from.

Not me! The major consumer use case for anything above basic DSL bandwidth is video. That has been obvious for a decade at least. No ISP should be selling fat consumer pipes and expect people to just send the occasional email.

Trying to charge both sides is just monopolist idiocy.

Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video

#18

Post by rgbrgb »

I think they'd do well to devote resources to making browsing videos less like shopping on Amazon. When I log into Netflix, I feel like a valued customer. They go out of their way to find stuff I'd love to watch and NEVER try to sell me anything. I've payed money and they want to give me a great service.

Comparatively, browsing videos on Amazon feels like I'm in Walmart. I am bombarded with continuous advertisements, reminded that I can buy the movies I'm looking at on DVD and BlueRay (almost throwing the shitty streaming quality in my face), and being sold a Kindle. Is nobody in charge of the user experience for Amazon Instant Video?

Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video

#19

Post by simonh »

tomkit wrote: post #2

I 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.

And he was telling them the same thing 5 years ego. And 5 years before that. And 5 years before that as well. I wonder what he'll be telling them in 5 years time, or in 10 for that matter.

Re: Netflix CEO: Amazon Losing Up to $1 Billion a Year on Streaming Video

#20

Post by rogerbinns »

nickm12 wrote: post #6
rogerbinns wrote: post #4

This 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.

True, but you can buy the streaming service as you use it. There are numerous CDNs out there, and Amazon itself has the same. Amazon did not need to spend an additional billion dollars in order to serve the first 10,000 customers of video.

If the expenses are coming from additional fixed infrastructure then the article is still misleading - the more viewers you have the lower the per viewer cost. The article in no way implies that infrastructure is relevant to their monetary claims.

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