Netflix is not a tech company (2019)
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Example: Google is still a tech company. As much as some might view search as "solved" (just like it was when Google was founded I might add), search continues to get better. Tech still plays a significant role in the actual core business (ie advertising) too.
I once again return to the Steve Jobs take on why Xerox failed [1]. An effective monopoly devalued the tech such that Xerox became a sales and finance company.
So, returning to Netflix. I agree Netflix isn't a tech company anymore because Netflix ultimately is about serving several thousand VODs and that problem is solved. Now Netflix's core business is about making content, licensing content and acquiring and retaining customers.
Obviously doing this (or anything) at scale is a lot harder than it sounds but at the end of the day Youtube is monumentally more technically challenging than Netflix due to the number of videos, the number of viewers, the advertising and live streaming.
"Tech company" is still a useful classifier IMHO.
You're kidding right? You think this problem is solved? Try using HBO.
A tech company is any company that understands it can leverage technology effectively to run a more efficient organization. They treat tech as the way to solve problems rather than throwing people at the problem.
First came HBO Go. This was the online streaming for those with HBO as part of a standard cable package. Apparently it was built on a .Net stack and had huge problems.
HBO Now is the service created for standalone sales of streaming. Apparently it had a completely different tech stack because of issues with HBO Go. Apparently it came from the same people who did the streaming services for MLB (Major League Baseball)> In my experience it was very good.
HBO Max is the expanded and updated content ecosystem that came with the merger. I don't know what the tech stack here is. I suspect it's just incremental changes to HBO Now but that's just a guess.
Perhaps the commenter was referring to HBO Go's problems as evidence that serving VODs isn't "solved". To clarify, I mean "solved for Netflix".
But they’re the only OTT streamer that carries the Lakers and Dodgers channels, so alas…
Or at least permanently hide all sports-related content on all devices I own.
I pay for the Hulu+/Disney+ combo that does not include ESPN, because I don’t want to pay for ESPN. Even if that triple combo was cheaper, I’d still pay for the combo that doesn’t include ESPN.
Last I heard their whole ecosystem is now based on this.
But if there's scrolling issues and some others, its likely because they're literally trying to run one codebase across everything including OTT devices.
This in on a modern Roku TV, released 8 months ago. 0 problems like this from Netflix.
This feels like too broad of a generalization to be a useful definition. I could make the case any hospital or logistics or <insert business here> is a tech company by this. Tech seems too ubiquitous for this to be an effective definition.
I haven't given it much thought, but maybe "a company with a business moat hinging mostly on its unique technology or ability to use technology" would be a better definition. E.g., Walmart could still be a (less) successful business without an online presence but Amazon couldn't.
"Solved" also doesn't mean there aren't people maintaining it or working on it or getting woken up at night by pages to keep it going. It just means, they've got a handle on it and when the Netflix executive team meets to discuss the business, they aren't spending much time discussing the question of whether or not they can stream video to their customers.
It doesn't mean there isn't room for improvement. Others have pointed to UI issues, for example. It just means the state of the tech probably isn't the top of mind for the C-team and the board.
Being done, is not what a tech company ever thinks of. Look at all the innovation coming out of Netflix as OSS products and blog posts.
FireTV device is an excellent value. Prime video? Well, it’s free with Prime at least…
I have to dash through shit way too fast to try to get somewhere that they won’t auto-blast me with whatever high volume video shit they want to force down my ocular neural pathways.
My guess is that it appeals to the average “turn on the TV and watch whatever is on” consumer, and Netflix probably prioritizes retaining them.
If I pay for ad-free and then they serve me incessant ads anyway, I get really pissed off.
So, I don’t watch Hulu. If something is only available on Hulu, then I just don’t watch it. I’ll happily watch Disney+, though.
XR and interactive content are the obvious next generation of platform with many technical challenges to overcome. It's hardly solved.
Netflix could swap out all the underlying tech for someone else's and update their players to use that and nobody would really notice, except possibly for the very few interactive experiences they run. That's why they're not a tech company anymore, they've matured the technology, and so have their competitors, to the point it's a commodity.
Not tech: tech improvements are internal and/or your IT staff is all about maintaining/integrating external products.
IT as cost center versus profit center may be a useful distinction.
Or perhaps "has a software engineering department".
Google is a tech company because both the search and the ads networks are hard at the planet scale; we can see how hard it is to compete.
Same applies to e.g. Twitter or Uber. It applies much less to, say, Reddit, or eBay, or Craiglist; their tech is secondary to their existing network effects.
A company like GrubHub definitely has a strong tech branch, but the tech is secondary to its delivery network and restaurant contracts.
A company like CNN, equally, must have a strong engineering / IT branch, but it's so secondary it feels totally invisible, and everyone sees them as a "media company", not a "tech company".
Maybe we need to revise the famous phrase to: Lies, damned lies, statistics and machine learning.
Do algorithms that encourage viewership actually increase revenue, or retention? What happens when the algorithm is so good I under-sleep, miss work and get fired, eventually losing my ability to pay for Netflix? What if I see this in myself and cancel my subscription, instead of using Netflix sustainably? What happens if I genuinely watch all programming I find interesting and move on to reading books on the same topics?
In other words, if the Netflix catalog is perfectly sorted by relevance to my personal interests, how much of it will I engage with? How far can Netflix content creators and licensors follow me down the rabbit hole?
They're still solving some interesting problems like how to watch the same content, in sync, with your friends. Interestingly my gf and I noticed that when we watched NFLX together using a video call to see eachother's faces/commentary our video would skew by noticeable amounts across the span of a movie. (eg even a 0.5% speed difference would give a 3 second skew in 10 minutes, which is enough for one to see someone's reaction to a surprising part of the video differ from your own.
So there are still technical fringes to solve that can value differentiate from late adopters like the channel specific providers like say the ABC app https://abc.com/apps
Amazon has taken a stab at this with a watch party on Twitch. I imagine you could have a private stream and do it that way maybe? Not ideal of course. It's intended for a different use case.
The best options I've seen involve using sites of questionable legality plus Discord.
Your observations of skew are kind of interesting and larger than I would've expected. But I guess this is the video players being built to show you the content not showing you the content at the same time as someone else. Specifically this means no effort is made to "catch up" in case of buffering. You or your GF must have a lot of buffering. This alone surprises me because Netflix's core delivery tech seems to be extremely good. But again, their delivery tech probably isn't built to solve this problem.
Anyway, while that's an unsolved problem it's not core to Netflix's business and that's the key criteria here.
Video should always be kept in sync with audio and not the other way around. You can freely drop or repeat video frames (within the boundaries of reason) without anyone being able to detect it in a blind test, but audio should not be messed with. This is why when syncing audio and video from different sources during production, the master clock is always the audio.
I can imagine part of Target/Walmart business to be like Amazon so they sell their tech to smaller or local players because they would have loads of knowledge in that specific area of ordering and fulfillment.
It is not counter argument as such - but idea that they could become Amazon competitors in some areas and be tech companies.
Many here would dispute this claim. However, it may be that SEO spam has caught up and we're merely at the old equilibrium rather than worse than before the peak of Google usefulness.
It's like every DDG related HN thread always has these comments:
- I moved to DDG X years ago and it's [fine|better than Google]
- I can't find anything on Google anymore
- Here's a search where I didn't find what I want.
It's reached the point that I just immediately tune out whenever someone brings up anecdotes. There just seems to be so much confirmation bias.
I mean no disrespect here. This is generally true. Anecdotes just don't mean anything but for some people tech people love them when it comes to search.
For that matter, is there any more objective data about the quality of search results over time or are anecdotes all we currently have?
It would be an almost impossible task to filter these out because they are specifically generated to look exactly like the content you are looking for.
They want to be a tech and data-driven studio.
Because if you’re not growing, then you’re dead. And no one wants to be dead.
This is the fallacy that all big companies seem to fall into, because they try to keep chasing the kind of growth numbers they had when they were small, but of course they can’t possibly sustain that level of growth.
But while it has also expanded its business model to include selling actual tech (Google Cloud, Chromebooks and Pixel phones, etc.) the lion's share of its revenue comes from advertising.
By similar definitions, aren’t almost all companies also money companies, employee companies, legal compliance companies, strategy companies, marketing companies, mission statement companies, fundraising companies, etc?
That sort of definition works for giving job applicants a hint about whether the company might need them I guess.
So it is with tech. On some level all companies are tech companies in that you need a website, Intranet, database, etc. These are all commodities though. A "tech company" is one where your tech is so good that either you can offer differentiated consumer experiences that nobody else can offer (eg. YouTube, Apple, FB's various products, consumer parts of Google) or people pay you to handle the tech things for them (eg. AWS, Microsoft, Google Cloud).
It’s a decent definition. It has some implications though
Almost no companies really differentiate via tech that nobody else can offer
Almost no game or app companies meet that bar. Most game companies have tech that another company can reproduce for example. Almost all apps use fairly commonplace tech.
There's a pattern there: Unity, Roblox, Unreal, Crytek, and Epic all build platforms and game engines used by other game developers, so again, you are what you do well enough to sell to people who don't want to deal with it.
What about Jet.com (pre-Walmart acquisition) that pioneered cheaper shipping / savings by informing users to by substitute products from the data distribution center.
It's a bit like how SpaceX is set to become a major player in regional Internet delivery but you wouldn't call SpaceX an Internet or a networking company. It's just a synergy between Internet as a business and reducing launch costs while proving reliability of first-stage reuse.
I'm tempted to describe both companies as "engineering companies" more than "tech companies". I just looked at Tesla spends a relatively modest (for its size) ~$1.1B on R&D.
So what's the difference? I'd say "tech" is largely about software and "engineering" is largely about hardware. Specifically, both Tesla and SpaceX are capital-intensive businesses where that capital is being used to produce physical products.
To be clear, none of this is official in any way. This is just the framework for how I think about things.
I wonder how Boston Dynamics should be characterized.
No it's not. That's a fake narrative that was invented by Tesla bulls to try to label Tesla as anything but an automaker.
It doesn't make sense to categorize Tesla primarily as a battery company or energy company. Batteries and energy (including solar) are a fraction of their business in terms of dollar value and that will continue to be the case. That has been true for nearly two decades now. And it's not a close comparison, the battery is less than a quarter of the cost of the car. For the Model S and X it's far less than that.
Tesla is an automobile company. GM and Ford are also not transitioning into being primarily battery companies. They're automakers.
Want to test this out? Kindly ask Tesla to immediately end their automobile business and start only selling batteries, see what happens to the stock and their P&L statement.
If in 20 years Tesla's battery business is finally larger than their automobile business, then sure, recategorize them.
It absolutely is not. Almost all Tesla's battery IP rests on Panasonic IP. Panasonic has been a leader in this space for 40+ years.
That's why when Tesla "open-sourced" all their battery patents in 2014 it was seen as mostly a PR move. It didn't really affect the industry because Tesla's IP in this area just isn't that valuable.
You lost me there. Even before Google started putting their thumb on the scale for its Machiavellian goals, search had gone way down hill. It is now at the point that I've got a better chance of finding something by randomly browsing the internet than through a dozen targeted searches. Unless what I'm looking for is associated with a multi billion dollar media company's content farm.
Thanks, I had not seen that before.
I worked for a telco that has the largest operating area of any telco in the world, and was also a monopoly with the highest internet prices in the world.
Steve saying that product people (& Tech people) were not seen to improve the company, and that only sales and marketing did is absolutely spot on. I didn't see that at the time, and now in hindsight it's obvious. It also makes perfect sense why the former VP of Marketing is now the CEO (of a telco!), and not the VP of IT or Network.
It isn't that Tesla has no MBAs on staff or the GM has no engineers on staff. But a culture that leverages engineering culture can iterate and reinvent itself and include new technologies faster than one who is focused on management metrics.
I'm not saying that MBAs are bad, there are plenty of companies that went way to heavy on hiring engineers and went bankrupt before their business plan was viable.
How many "non-tech companies" are non-tech companies simply because they're too disfunctional to use technology effectively? Think of your bank with its shitty password rules, only offering 2FA using SMS, and no useful APIs; that's a non-tech company. They either aren't aware of their lackluster technology, or are unable to organize themselves well enough to improve it.
Is the IT/Software Dev a profit center or a cost center, easy as that.
For a modern information-centric company, what does that mean? Get the technology right. Pay some smart people to get your internals ship-shape and reproducible, for example.
I'm not saying banks are great at tech, because on any individual metric it would be really hard to find an example of where they lead, but they (and other highly regulated industries) have a lot more to solve for along the way.
What is Microsoft then? What is Apple?
Google I can accept as some kind of service provider and advertising company that uses a lot of tech. Amazon as well.
So Intel, TSMC, Nvidia are not tech companies?
There is an incredible amount of advanced technology being created and used by more "traditional" industries like manufacturing, aerospace, or animation.
Why should Facebook be considered a technology company but not Pixar, Ratheon, General Dynamics, Corning or TSMC? It makes zero sense and relies on a very self-serving definition of "technology".
This hits the nail on the head. If you dig down into it, this almost always aligns with the companies people describe as 'tech companies'.
Maybe it's more to do with the strategy of the company.
For the vast majority of companies technology is tool, not the product, but whether you call them a "tech company" seems a silly game. I'd think pretty much all companies are "tech companies" and the better you are at using those tools can provide a competitive advantage.
"X makes money, therefore they are not a tech company" seems rather oversimplified in the same way "X is a tech company" is oversimplified. Actually, it seems oversimplified to the point of maybe not being so useful.
I think the way most people would define "tech company," if they were pressed to offer a definition, is that a tech company is one that derives the bulk of their revenue from selling technological goods and services, rather than using technology as the means to sell other goods and services. There's no way to keep that definition from being somewhat fuzzy, but if I say "Dell is a technology company and Cadbury is not," I don't think people will really object to that unless they're trying to be pedantically clever about it: Cadbury may use technology in all sorts of clever ways to manufacture chocolates and get them to retail shelves, but they're selling you chocolates.
There are obviously companies that complicate this by having multiple divisions with different kinds of revenue streams -- Amazon and Apple both come to mind immediately -- but Netflix really isn't one of them. What they do requires a lot of focus on their technology, and from the perspective of someone perusing their job listings it's very easy to think of them as "a tech company." But what they're ultimately selling is access to their content.
There are companies that effectively use technology to outcompete (or "disrupt") incumbent companies in a market. Amazon in retail, Netflix in media, Craigslist for classifieds, Uber for taxis, etc.
It seems as if many existing companies, like Cadbury's perhaps, aren't able to effectively re-work their business models with the new possibilities available via tech. Thus they're "non-tech" companies even if they do make some modest use of technology, but ultimately their business model predates tech.
"Tech" companies in this space are the ones creating or adopting brand new business models in an existing space enabled by technology. This is the "software eating the world" part of the tech market.
So Netflix is using a tech strategy, but it won't forever be a tech company.
As the particular technology a company deploys becomes widespread, then everyone will deploy it and it will no longer be a tech company.
To put it another way: Netflix was not a tech company when it launched and was mailing DVDs, it became a tech company when it started its streaming service, and as other companies also launch streaming services, it won't be a technology company in the future.
Across many industries, especially in the past several decades, companies have used (modern) technology to compete, and the successful ones grew and gained recognition for good application of technology.
Google, at the core, doesn't sell technology to consumers. They help people find and share information. (Yes, they sell consumer products that have evolved in the technology age, and we often call a phone or a modern speaker "technology.")
Apple is a consumer products company. Microsoft is (by revenue share) an enterprise solutions company. (This includes software, hosting, APIs, etc - all technology.)
As sibling comments have pointed out, from the beginning of their existence, automotive companies took the newest technology (initially motorized transport!) and used it to sell personal transport to consumers. Technology is in almost everything sold (except when it clearly isn't... food, most clothing, some services) or it's used behind the scenes.
Overall, what value do we get from trying to draw a line between technology company, and "not" a technology company? Netflix by itself doesn't really try to sell you technology, and yet they were instrumental in selling smart TVs and streaming boxes.
Do we want to know as prospective employees? Knowing if we are cost centers or profit centers?
Such as if you were to ask people, "which is the tech company, Apple or Ford?", most would choose Apple, choosing to call Ford, instead, a "car company".
I personally consider "tech companies" to be companies with tech I find interesting to think about - Netflix definitely qualifies under that header, Apple does too owing to producing a huge operating system, Amazon not only has AWS services on offer but they also run a storefront of a staggering scale and were pioneers in how storefronts like that were discovered... Dell - Dell might get grandfathered in as a tech company based on how they were earlyish into the market of web-based computer sales (ala "Dude you're getting a Dell" days) but now a days I assume their tech stack is a pretty ornery customized CMS like thing with a relatively simple order processing system behind it.
Only half of that revenue is from “Dude you’re getting a Dell” - PC (and network / peripheral) sales. DellEMC (mostly enterprise storage or hyperconverged hardware and software) top line is $35 billion or so of that number. The rest is VMware and other software / services.
Simple order processing it is not, it’s like saying a Google is “just search and ads”. Somewhat true, but misses a lot.
I think this is less a flaw of the definition and more a sign that Amazon should be broken apart and AWS spun off as an independent company.
Except, many of these companies have a second, b2b service that they're cultivating as a goal unto itself: customer attribution, identification, aggregation, etc. Companies like goPuff (or Amazon, but Amazon has a hand in everything so is more complicated for this example) have a core "not really tech" service of online ordering of human-delivered goods, but they are actively working to turn all of those engagement/sales/preferences info into a packaged product they can sell to brands and marketing companies, which is at its core, data aggregation and analytics as a service...so "kinda tech"?
Probably because people don't even have a good definition of "tech". Everything we use is tech. Even books. Some of it is old, some of it is new. But people's definition of tech mostly centers around when they were born.
As a software developer, I mostly care if a company considers their software a competitive advantage. Because they're more likely to treat me well. This is also similar to how I tend to define tech companies: companies that view tech as a competitive advantage. So they aren't just buying stuff off the shelf - they're figuring things out in house, regardless of what they sell.
Other industries also exhibit this, like media.
And that is what differs an auto company from a Google. The next car sold still has significant capital investment.
I have never heard that. Car companies are mostly manufacturing, that is the major part of their organizations and what drives their decisions. They have big engineering teams, but they have way bigger teams working at factories. If you had a company just creating car designs and selling those to manufacturing companies it would be a tech company, but the current ones aren't.
When I visited our customer auto assembly plants the only actual manufacturing going on at was the frame and paint. The rest of the parts were shipped in from other manufacturing facilities.
The auto company did design the parts and send them to contract manufacturers, which is what I worked at. Again, I’m sure this depends on the vertical integration and supply chain relationship of each company, but I think there is less manufacturing than assembly going on.
Auto makers could turn into tech companies again but their risk tolerance has to be turned way up.
But we probably should just stick to industry standard jargon. Lockheed and Boeing are definitely technology companies, but not "tech" companies, although that is even further complicated in that they do sell computing hardware and software products, not just airplanes and missiles.
Netflix unambiguously only sells entertainment, though. They use an app and a website as a delivery mechanism, but the app isn't the product.
Also, as much as the emphasis on hacker news is think of employment by Netflix as being an engineer for Netflix, engineers are very far from the highest paid contracts. No engineer is getting the $500 million deals Netflix hands out to Shonda Rhimes and Benioff and Weiss. Netflix itself recognizes content is king here.
How would you define pre-AWS Amazon? It doesn't seem to meet this definition, yet I think most would still consider them to have been a tech company
there is no real definition of a "tech company" or "tech industry", the word "tech" defines the operating model. This is the dirty little secret VCs don't like to tell you because it means they can call Tesla a tech company (its a car and battery manufacturer) to fetch tech-like valuations or Facebook a tech company (its a media company). Tech operating models typically net high gross margins (i.e. Facebook) which is one of its major defining characteristics.
I therefore posit there is no such thing as a "tech industry", but rather businesses that sit on a spectrum of operating models from:
- Back office IT supported
- Tech enabled
- Tech Led
As an example, pencils are an excellent technology for writing. (Petroski's "The Pencil" and "The Evolution of Useful Things" are great reads on how much innovation it takes to make something mundane.) But Faber-Castell is definitely not a tech company. Similarly, ~100 years ago, electricity was novel. Fortunes were made starting and investing in electricity and electrical-adjacent companies. Now it's mundane.
Dealing with novel technology requires different skills. Both for the specific technology involved and for wrangling things that are less well understood and keep changing. A good example is the IT department and what they are and aren't responsible for. The breakroom toaster? Nope. The breakroom wifi? Yup. The breakroom TV? Well, that depends.
For me the useful dividing line for "tech company" is where novel, volatile technology is at the heart of their business and vital to their success. That doesn't last. And indeed, the markets have been too generous about pretending certain things are tech companies. Most notably, WeWork, but I'm sure here folks here can name plenty more.
This does not guarantee a strong competitive opportunity, nor strong execution - but it makes it possible for the benefits of IT to be realized.
Actually, there are several legitimate definitions of 'tech company', this is just a relevant one today that is significant long-term.
Aside from weird blockchain entities, this doesn't exist. Companies may use software, but they are made of people.
Making money is what the _company_ part of "tech company" is about ... right?
It sounds like you want to imagine a world where making tech for non-business purposes is more normalized. I also want to live in that world. But I think perhaps we're so far into a world where tech to be used by an open audience (as vs e.g. secret defense tech) is entirely the province of for-profit enterprises that people have ceased to consider that the players in tech need not be companies.
Needless to say, the difference on how the tech team is valued is night and day between this last one and all the others.
Of course eventually all discussions of this nature devolve into the intricate definition of "tech company", and in the absence of one that is agreed upon, bringing this whole thing up is pointless.
I used Netflix back when it was mailing me DVDs, and loved the online streaming back in the halcyon days when it seemed like they had everything.
Then came the dark days when content owners began pulling their IP from Netflix and scattering it all over the internet behind a dozen different options that offered them more money or control, and Netflix was a barren wasteland without anything that caught my eye; my queue was a variety of B-tier series that I tried a few episodes of and gave up on.
So I canceled my subscription, for several years. It didn't matter what their UX or uptime was or how smooth their video codecs, they didn't have enough content I wanted to watch.
Then I came back for the original content -- I forget which series first made me sign back up; House of Cards? -- and while I watch licensed content on Netflix from time to time, at least half of what I watch is produced by Netflix.
Netflix has developed a novel data system (as evidenced by papermill) that is likely responsible for countless decisions that manifested the content which brought you back. I don't know first hand but I suspect data is integrated into their everyday processes in ways most companies can't even dream of. Does that make them a technology company again?
Even outside of movies they have significant care to innovate and push the boundaries, for instance in theme park animatronics or toys in general.
Whether they are currently a tech company is a bit fuzzier. Certainly they new have content as an additional differentiator, and the margin of their tech advantage has narrowed.
In terms of efficiency, we've been serving at 100Gb/s (mostly TLS encrypted) from single socket servers since 2017, and are moving towards 400Gb/s today. How many other companies can say that?
I'm talking about the push to 400Gb/s at EuroBSDCon online, a week from Sunday..
There is some technology component where the UI, resposiveness, reliability, and so on impact the user experience. But still content is king there. The HBO apps suck and their streaming is less reliable than others but they've got the content I wanna watch so I put up with it.
I don't think this is accurate - the main value proposition of Netflix seems to have always been "streaming site with lots of mainstream content, that is also legal". I.e. it's the streaming deals they've made that mattered, not delivery tech or their web player.
Yes, you could be pedantic and call a lot of that logistics, but the lack of physical stores, the website, the queue and rating and recommendation system (the Netflix recommendation algorithm was a huge part of its appeal, even after the streaming stuff, until Netflix got sued for accidentally outing someone with the algo), were all tech.
Netflix has ALWAYS been a hybrid tech and content company. Always. But it started out very much more on disrupting the video store model the same way Amazon disrupted brick and mortar bookstores.
But even in the popular understanding of what a tech company is, Netflix more than many others DOES have historical and current tech bonafides. 25 years ago during dot com mania, there wasn’t a lot of hand-wringing about whether WebVan or Pets.com or Amazon or whatever were tech companies. It was accepted that e-commerce WAS tech, even if it was different than DEC/Compaq/HP or Sun or Microsoft or Apple or whatever.
And Netflix operated from a website, used technology for its logistic and delivery system (much like other e-commerce systems)and had a recommendation algorithm (that they had a contest to improve, because they saw that good recommendations reduced churn) and a focus on UX to keep the product good.
It took them more than a decade, but the goal of delivering video via the Internet was always there. Roku, which in its original incarnation was simply a Netflix streaming box, was originally ideated and developed at Netflix before the company decided it didn’t want to be in the hardware business and so the head of the project and the engineers left to make Roku. Netflix has done as much work as any single company except perhaps YouTube to optimize and pioneer how to effectively serve large swaths of video to users across the globe.
The problem with Ben Evans’ piece is that he misunderstands that Netflix has always been a tech and a content company. Even when it was a rental company with more tech and no original content, the recommendation algorithm and the dedication to buyers and curators who would make the decisions about what DVDs were purchased (eventually customer signals played into this too) always had a very strong content focus in the product.
That’s the reason Netflix works. It was the first media company to really innately understand both tech and content. Disney and HBO (WarnerMedia, whatever) have great tech stacks too (especially Disney), but Netflix was the first and is still the most successful.
Also, the Netflix shipping/return mechanism is arguably more convenient than even driving to the library. The envelopes were prepaid and were built in such a way that opening it uses one part of the packaging, which exposed a tape seam to seal it for return. Chuck that in any mailbox and you're good to go. Better than driving 15 minutes across town to the library to return a movie in the drop-off bin and hope it doesn't get lost and I get charged for it, forcing me to go inside so I know it was returned properly...
I want the local library version to get better, but right now it still has a ways to go in my city.
That's the problem with software. It solves problems so well they stay solved, and only constructed problems such as IP ownership remain.
Today, their best attempt at a moat is content, and it's a poor one at best since they can only make so much original content and it's not as if they can do so in a way that is inaccessible to other services.
I mean they were the pioneers in offering tv and movies via streaming. The tech is really not that dramatic.
You can think of streaming tech in three parts: video quality, recommendations and UI.
Arguably video quality is the most important, but other platforms have already offer similar/better quality (albeit a lil more data).
Their recommendations and UI are better than others but I honestly don't care about these two as they are still not good enough for me to discover content I would want to watch, for that I still have to go to reddit/curated articles.
So I would say Netflix's contribution was more in pioneering tv streaming as opposed to tech. They are now competing mostly in terms of their originals, so I would label them more like Disney/HBO rather than tech.
If a company came out with a fully automated oil drilling solution they are a tech company. Tech defined the company even if the majority of their business 20 years later comes from the fruit of their technical development labor. Netflix is tech company that now mostly makes money from content.
Netflix is still trying to figure out what it is. I think their growth post-DVD was based on the assumption that they would be the clearinghouse for all video content; with Hulu and the further balkanization of the video space, it was clear that this was not going to happen; that Netflix was destined to be one provider among many, and that their sources of content would start to dry up as other companies decided that the streaming and application and appliances were commodity technology that they could just brand in-house.
The quality of the UI of Netflix is terrible, but everyone else is so much worse that for the moment they stand out. And they never managed to get on the bandwagon of selling add-on packages like Hulu and Amazon did (although both of those products have such abysmal UX that you gain very little over using the respective native apps).
So now they're continuing to play up the original content game, which appears to be where the industry in general is headed, because the Paramount Consent Decree is so dead that it can't even hear our prayers.
They are a tech company insofar as they have invested heavily in the tech and as a result have the most reliable and usable platform (and the most research into recommendations), but the gap between Netflix and commodity streaming is narrow enough now that their edge in the technology space is gone. So they're basically a studio/theater at this point, like everyone else in the space. The only difference between Disney and Netflix is that Netflix doesn't have a theme park (yet!).
(Woof, so many caveats here!)
Unless they pivoted at lightning speed, I don't think this is true. When I saw the online subscriptions start for Netflix, I, some random person on the street, observed that the moment a white-box streaming service is created, all of the content-owners will have zero incentive to put their content on Netflix.
If I could think of this, then so could Netflix, and sure enough we started seeing netflix buying and producing content of their own pretty quickly.
I think it's generally understood that, in the 21st century, a "tech company" is a company that uses tech as the principal competitive advantage to replace traditional "non-21st-century-tech" incumbents.
Obviously, Netflix used streaming, collaborative filtering recommendations, and a massive CDN to replace cable TV subscriptions.
If that's not a perfect example of a tech company, I don't know what is.
Yes Netflix needed a good content library too, but that's never been its primary differentiator. NBC and HBO have been producing good content for many decades now. That's table stakes.
There's another "level" of tech companies, you could argue -- companies that supply tech rather than just use it as a competitive advantage -- e.g. Microsoft, Apple, MongoDB, Dropbox.
But today we tend to label those "software" or "hardware" companies specifically (or a combination). Perhaps in the 1980's those were the only "tech" companies. But at least ever since the dot-com era, "tech company" has meant companies that use tech as the principal competitive advantage (as opposed to merely increasing internal efficiency).
Did they develop any of these technologies?
Perhaps one missing piece is that there is a first-mover advantage to being the tech disruptor, but in many cases the tech quickly becomes “table stakes” and the strategy goes back to where it was.
A useful contrast is with HBO. Yes HBO has a streaming service and app... but its competitive advantage is in prestige content people will pay $$$ for. Somehow HBO's management team is incredibly good at nurturing content in an artistic critically-acclaimed way, rather than tech-data-driven way.
For Netflix, tech is the primary differentiator and the content is table stakes. While for HBO it's reversed. It all depends on how a given company is choosing to compete in the same market.
It was good. As far as I understand, ATT got rid of most of the bosses responsible for nurturing that quality over quantity atmosphere and they are also now pumping out garbage.
A few months ago, I opened up the HBO Max app (which I only have access to due to it being bundled into my mobile phone plan), and this is the show that was being advertised:
https://www.hbomax.com/series/urn:hbo:series:GYN4ywAXUS1OLNg...
...you mean shows like the critically-acclaimed Mare of Easttown and Hacks and The White Lotus, all this year?
Nobody ever said HBO was exclusively prestige content. There isn't enough to fill multiple channels 24/7. But it's still the main factor that drives subscriptions.
Thanks for the recommendations though! They look interesting.
And a lot of their Netflix-branded shows are quite mediocre. I'd say they're not so much confident of their statistics about each individual show as they are about being able to promote their shows and get them viewed anyhow.
And on the average, it works out for them without the messy bits in the middle with ordering a pilot and having to somehow assess the quality of that pilot in regards to a full show.
Is Netflix still a tech company when Disney (incumbent) now offers similar tech? Does Netflix still have tech as its principal competitive advantage, or are subscribers now choosing who they subscribe to based on content?
If the latter, then Netflix is now a media company, and whatever tech superiority they still have is about as relevant as Betamax's tech superiority over VHS.
Then Disney, HBO, and CBS are now tech companies.
To stretch your analogy, you might even argue that Target and Walmart are tech companies too. Or UPS, DHL, and FedEx. They do massive scale logistics using computers.
I would go by a different definition for tech. Are engineers the principal innovators and expense driving the company forward? Are automation, growth, measurement, iteration, and hard problems a chief mindset? That's what tech is to me. You could even meet those definitions without being an internet company. SpaceX, Tesla...
It's pretty much the only differentiator, and what people mean when they say "content is king." Very few companies can compete with Netflix on fidelity and technical performance. Yet Netflix is second fiddle to industry giants that contracted out their streaming platform development, because ultimately consumers care more about what they're watching than how they watch it.
I think this is always a bit of a silly argument. If Netflix was showing everything, but the tech was terrible, no one would've signed up. You need both.
If I was a little less honest, it would be easy to skip paying the subscription entirely. I generally use their apps now to find and try new shows, then download them to Plex once I know I like a show (so I'm not burning bandwidth fetching shows I'm not gonna watch).
The whole "are the normies capable of this" argument has turned into an arms-race against Youtube/FB for easy setup guides.
That said, yes, the number of people they'd loose over shitty interfaces is probably kinda small, but I'd argue that as guides, youtube vids, and even all-in-one seedboxes become more available, that population is gonna grow. All it takes is some streamer to lay out the current process.
I am willing to bet that this had zero impact on cable subscriptions.
The hazard of reading stuff like this is that it makes the world seem much more orderly and predictable than it is. Case in point: Zoom. "Videoconferencing is a commodity". "Distribution is all that matters". And all of a sudden, someone does this "commodity" a lot better, without the pre-existing network/distribution/brand of someone like Skype, Google, etc. How do they explain this? How does it make sense that a team can work heads-down without any clear distribution advantage and just grind, and build a large, meaningful company by making a better product?
It's the same deal with Yamaha Motorcycles. Read their story. Bootstrapped from a "nobody" brand in the US, stiff competition against Harley-Davidson and their ilk. They just got better and better, gradually improving year after year, until they're taken seriously by hardcore enthusiasts and are one of the leading motorcycle companies in the US. How do you explain this success in terms of moats, 2x2 matrices, SWOT analysis, competitive positioning, etc? Sometimes a company wins because they just want it more badly and are willing to push their people harder, and outwork/out-deliver the competition.
Calling the tech "still fundamentally a commodity" bothers me not because I'm a technologist, but because it's horribly hand-wavey and imprecise. It sounds precise, but what...exactly...does this mean? As other commenters have pointed out, sure, a commodity that cost oh, 100 billion dollars and a decade to build, isn't easily duplicated, and meaningfully contributes to the user experience? I heard someone describe gold as a "6000-year bubble" last week in the context of the "crypto bubble". Same idea--"a commodity that nobody else has, took a decade to build, and over 100 billion dollars". Some "commodity".
As a CEO, I increasingly find all this strategy stuff noise. All that matters is delighting your customers. You do that and charge a reasonable price, you're going to succeed. It might take a while, and of course you need decent sales/marketing execution, but overall, just focus on keeping customers happy, and you'll get there.
It plays faster, seeks faster, properly does Dolby Vision / HDR when the content has it and has different language subtitles. It animates properly from one screen to another (in stark contrast to Prime Video).
The content exploration and navigation is something to be desired, but comparing to other apps, it is on par (similarly bad).
I think Benedict's larger point is correct that I might put up with shitty Prime streaming because I want to watch what's on it. But it's not a delight. No way. And in the long term, that shit matters. The joylessness creeps up on you over time, until eventually you're left with Eclipse, Windows 10, or Android scrolling. Your NPS scores fall off a cliff, you get zero word of mouth, no lines outside of stores, nobody talking about it on social media/news/etc. and then everyone acts like it's some big shock.
It's not fun!!
I think Tesla, Apple, and Netflix all really get this.
God damn the software was shit. All the "car" part of it was fine (arguably excellent, even) but the rest was just. Ugh.
(four control surfaces to use cruise control?!)
The Tesla dashboard software package is just plain delightful, and that's such a huge part of cars now, it really matters.
Investing in companies with strategic advantages is much more profitable that trying to find the one commodity company out of thousands that are able to escape from the fires of intense competition.
Strategy is also how you avoid having to delight your customers to be profitable. Just get a new law passed that is inconvenient for your competitors to follow.
Delighting customers is also hard because people are unreasonable and unpredictable. Try selling an app. Even if your app adds lots of value over your competitor, people aren't used to spending money on apps. I would guess the vast majority of apps that make money play into people's addictions and get 1% of their users to buy pay-to-win items or custom skins for their players/items. Only the unreasonable people actually make these companies any money.
Quite a lot of analysis seems to be making people feel better about not being technical, when technical jobs are exploding in prominence, and you can sell your analysis better if you make customers feel better.
Also the idea that Netflix's content strategy is cleanly separable from its tech is totally bogus. Netflix uses some sophisticated tech to decide what content to produce and also has a huge amount of in-house technology involved in the actual production of content.
Which is a very different question from "if I like to do X, where should I try to work?" It's closer to "what is the company's largest expense" but that's still different.
Different categorization schemes for different purposes.
> Like Sky, Netflix has used technology as a crowbar to build a new TV business. Everything about how it executed that technology has to be good. The apps are good, the streaming and compression are good, the UI is good, the recommendation engine is good, and the customer service and experience are good. Unlike American cable subscribers, Netflix subscribers are generally pretty happy with the tech. The tech has to be good - but, it’s still all about the TV... It used tech as a crowbar, and the crowbar had to be good, but it’s actually a TV company.
By this logic, Google is less a tech company than an advertising firm that used tech as a crowbar! Microsoft is an office supplies manufacturer! Which seems absurdly reductive.
In my mind, if you're scaling customized services for individual users far beyond what a team of top-tier customer service professionals could do (or you're cyborg-izing those service professionals!), you're a tech company. Plain and simple. And Netflix fits this bill because part of its approach to content creation is that programming choices should be driven by quantitative insights about individual users - it's just a very, very long iteration cycle on the optimization algorithm.
This is all BS of course - Netflix is a media/content company, Stripe is a financial services company and Tesla is an automotive and clean energy company. The fact they leverage technology much better than their peers (little offshoring, lots of R&D, "built here" mentality) is more relevant to the how they do it than to what they do.
Also let's say that a mega rich person starts investing in 15Billion / year on content like Netflix, but at the same time does it by creating Blockbuster like stores where people can walk in and rent said content. That's not a Tech company is it?
There IS a reason these companies born out of the SV are tech companies. Flagging as this is just a click bait puff.
I think what makes a company a "tech company" is doing actual R&D. Netflix pioneered a lot of technology around streaming. Google invented the modern search engine. Microsoft builds operating systems. Apple designs hardware and operating systems.
NBC with Peacock? No, they just bought something off-the-shelf.
Is Netflix still doing real cutting-edge R&D? Maybe? Maybe not.
I've been in video tech for a long time, and you glossed over the part where Netflix does tech company things. They invented VMAF and per-title encoding. I've seen countless video tech talks and Netflix consistently brings innovation to the table.
However, the actual "hotels" are owned and operated by AirBnB hosts, and AirBnB does not derive significant competitive advantage from the quality of their administration, beyond the value of having a large number of hosts on the platform. AirBnB is fundamentally an information company. Its real competitive advantage is that it owns the channel to the customer, it has a really good search function, and it also owns all the data that makes up reputation-management system that's critical to good hotel reservations. These are all tech areas; AirBnB can afford to lose a bunch of venues, even really good venues, but if it loses the review database a good portion of its competitive advantage goes away.
There was a time when lots of people believed Netflix's key competitive advantage was the recommendation algorithm and viewing history. I'm not certain we're in that world anymore - Netflix seems to care a lot more about content than recommendations these days - but I can see why Netflix would've been considered a tech company back then.
To think in classifications, you pick your classification based on the aspect of company you care about.
Netflix's culturalness, financing, hiring/labour practices are more like "tech companies." Their competition, is home entertainment for consumers, and media companies for content. Their business model is basically cable. etc.
In any case, it seems the author goes through all these semantics to notice tha:
"you can access the same service on any device (Netflix, Spotify, Kindle), or the same content on any service (music, books), or both. Content doesn’t stop you switching - unless it’s exclusive, and that’s a totally different budget."
So yep, key point. Media economics is understudied.
If you have very high fixed costs, but the profit from each additional subscription is ~90%, and you have a clear path to growth - your future profits could be ridiculous.
Netflix is selling non-durable goods with insane marginal profits. In this way, it isn't much different than a software company - like Microsoft in the 90s.
The distinction between whether you are selling software or NFTs, streaming videos, or ads seems less relevant.
I don’t see the irony. This seems to be a circular definition of “TV industry”. The technological breakthroughs (cable, satellite, streaming, mobile) that completely change TV don’t count as “tech industry”. Silicon Valley startups Netflix and Apple somehow don’t count, neither does Amazon, and YouTube doesn’t even get mentioned.
I also have an issue with the implied definition of “commodity”. I think a commodity needs fungibility and availability. So storage is now a commodity, but large scale streaming is not. You can’t order a Netflix scale infrastructure on the market.
For me a tech company is any company that offers product that is computerized hardware, software, digital asset, or digital service that they have created (so not just a case of repackaging). Netflix meets that definition because it offers a viewing experience with recommendations, watch lists, etc. By my definition many of the companies online would be considered tech companies though.
I do think Areading314 is partially correct too. Most companies today are going to be using technology. Though not most will be creating it as a product.
10 years later, Netflix kick started the streaming revolution. In 2008, Netflix licensed the Starz catalogue of 2,500 titles.
In a podcast episode, Ben Thompson said Netflix was his favorite company to write about because they have successfully transitioned their business model multiple times to take advantage of technological shifts.
https://podcasts.apple.com/us/podcast/ben-thompson-platforms...
Which to put it in the words of the author: get as good at “TV decisions” as HBO before HBO got as good at tech (making apps, good UI, good recommendations and streaming back-ends) as Netflix.
I think it makes sense. Wish the article was better at explaining how the tech-crowbar worked for sky and Netflix.
You can say this about any tech company, it's just where you draw the line of what "tech" is.
If so, I feel like Netflix qualifies. For them not to be a tech company anymore, they'd need to pivot to only producing TV and Films, with outsourcing or licensing their work to a company that builds the technology to host and deliver the content to users on their behalf.
I'm not sure Netflix would be doing as well if they pivoted to that.
By having in-house technology teams that you invest in, it also means that the company is acquiring engineering and scientist talent, potentially acquiring tech patents, as well as building technological means that in-theory they could pivot to resell the tech or license it to others if they wanted, making tech not just something they invest in and use as a differentiatior, but making it an actual product or service they sell, this is what Amazon did for example.
What UI? Back when Sky launched the box would show you the channel number you where tuned to via LEDS over the channel selection buttons and/or via a simple OSD like you would get on any other TV with a OSD displaying channel numbers.
The best UI you got was went something wasn't "working" (be it because you didn't have the auth or because something went wrong) and the OSD told you it couldn't decrypt a channel / to insert your viewing card.
It wasn't until the launch of digital I would say it gained an UI.
Granted the truck rolls and the customer service was decent from what I recall. I don't recall any major issues. (and the UI on the digital boxes wasn't bad when it came out and have been added to since, no idea what the Q boxes are like as I cord cut a fair few years ago.).
The "technical challenges" they are facing are similar to those Enterprisey IT developers face when they could not wrap their head around Kludgy Java framework APIs.
Also If I look at Netflix OSS at github it gives that feeling of below average enterprise Java software with deeply nested packages with probably 5 percent of meat and 95 percent scaffolding / config around it.
I wouldn't be surprised to learn if Netflix's famed extensive systems monitoring is not because they are on cutting edge but that million instances of half-assed Java microservices do need endless monitoring just for standard http/database request processing.
So yeah, Netflix is not tech company in many meanings of tech.
Yes, they invent a little more technology than your typical small business spreadsheet. But tech is a commodity for them because the only strategy for tech is that “it has to be good”.
Nobody cares about docker, until businesses (that might be in retail/healthcare/cruise/whatever) realize they can use docker for their needs.
Nobody cares about stripe. Until businesses realize they just pay for a well documented, easy to use SDK.
I work for a company in a sector that is not that familiar with technology. We're bridging that gap, and the software we sell is a technical product, but engineering is only part of the equation. Again, nobody cares about what we make until those business realize that software loaded on those phones everyone carries can help them improve/increase their business.
Just solve problems. Labelling problems is for business analysts/consultants/hamster wheel professionals.
1. If a company sees its technology capability as a profit center, then it's a tech company.
2. If it sees technology as a cost center, then it's not a tech company.
It's a bit of over-simplification, but it usually works for me and people I speak with.
If you describe a company based on the product/service it provides, there is no such thing as a tech company. There are car companies, project management software companies, web search companies, entertainment companies, oil companies, etc.
If you describe a company based on their core competency, there are tech companies, product companies, brand companies etc.
You can choose any dimension you want. It's usually just helpful to then be consistent, ie Tesla is a car company and Netflix an entertainment company. Or both are technology companies.
It would be equally futile to say "Betsy's Diner may serve coffee, but it isn't a cafe; it's mainly just a sandwich and pastry shop." Or, "Fritz's Foods may sell a few items in bulk, but it isn't a grocer; they mainly sell individually-packaged items."
I wish ben would do a little more research. Netflix imo very much is a tech company. they released an entire x.509 certificate orchestration framework. HBO and Disney to my knowledge havent released any devops tooling.
the only reason additional industry specific questions exist is because they have so many simultaneous users that theyve reached theoretical maximums on their near-free resources
when other industries reach the same place, if at all ever possible, then we can split hairs over this distinction
So tech is bit murky, but Netflix with Google and Facebook should clearly qualify.
Large companies with established proven processes can migrate towards the tech ladder. But small companies cannot become a tech company aka shark tank funded red dress.
Looking forward, I'm guessing "tech job" is another label whose days are numbered. Already, "I work in tech" is a fairly nondescriptive phrase. It's the new "I work with a pencil."
1: Join a start-up
2: Work hard to grab as much technical fields under belt as possible, preferably be the CTO or one of the tech director/VP
3: Leave when it's broke/successful enough to be less technical related
4: GOTO 1
I believe a simple approach to find out what type of a company - a particular entity is - is to seek what comes to your mind when you think about that co.
Toyota - Cars: so, they are a car company.
Microsoft - Windows. So, they are a software/tech co.
Google - Search. But, they are part of a conglomerate.
Look at it from that lens, and Netflix is a tech company.
The reasoning is that the rest of FAAMG does shitton of "other" kind of CS oriented tech (OSes, Databases, Compilers, Heavy ML research) and stuff
They're way too big
Can Netflix compete just on its tech? No.
Both can be true at the same time.
We should all describe our own thoughts and feelings about the term "tech company", in order to sort this out...
They are NO MORE a tech company than WeWork ever was or is.
Simply using "IT" to do a non-technical job does not make you a "tech company"!
Basically every company just shifts their marketing language to whatever industry has most aggree-able regulations.
I kinda think a more important conversation is about what Netflix actually is. Subscribers are the livestock, not the customer. The customer are propagandists who wanna promote something with a documentary. So many of their docs have a clear influence peddling motive.
My favorite is Fear vs New York City...a mafia doc? Well it turned into a commercial for Giuliani that was hyper-targeted at New Yorkers when it looked like he was going to get charged by SDNY. You can argue that the content is compelling but the idea is that they interviewed Rudy and Michael Chertoff and a whole bunch of real corrupt villains and...i bet netflix paid them. That's where our subscription money actually goes.
We all agree they're not a tech company but what do ya'll think Netflix actually is?
Send out a new drive per year.
Do they really only have 4,000 movies in the US?
The size for 100% isn't even that big given a few iterations of storage tech.
I'm just blown away by how little Netflix really gives you. Given the push to internally-financed programming they've basically become a production company with streaming bolted onto the back end. Their market cap is kind of a joke.
Okay? :-)
Downvoters: So Nvidia, Intel, AMD, TSMC are not technology companies?