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Comment by RcouF1uZ4gsC | Hacker News Reader

Based on your definition, Netflix is not a tech company, it is a media distribution company.

Amazon’s AWS makes it a tech company, otherwise it would just be a retailer.

> Based on your definition, Netflix is not a tech company, it is a media distribution company.

Sounds about right. NBC was once owned by GE, and had a formidable internal engineering team of their own. Would anyone say NBC is a tech company?

Hell, their name even contains the distribution medium they had to master (National Broadcasting Company), just like netflix.

>Amazon’s AWS makes it a tech company, otherwise it would just be a retailer.

Sounds right to me. If you removed AWS from Amazon, what would be the biggest difference between Amazon and Walmart? Walmart has physical locations vs Amazon being online only. They both run logistics empires and websites that carry third party products.

>Amazon being online only

Except for Whole Foods, lockers, admittedly small-scale experimentation in other retail, a fleet of logistics vehicles and partnerships...

Yes it's much more online than Walmart but it absolutely interacts a lot with the physical world.

They simply meant their primary retail business was online. Of course they still operate in the physical world.

Even outside my definition, Netflix should be considered a media company first. They spend a lot more money licensing and creating media than they do on developing tech.

Of course both media and tech are in the TMT sector, so either way Netflix belongs there.

> I think what this means to be a “tech company” often. Benedict Evans recently wrote about Netflix, and how it not really a tech company [https://www.ben-evans.com/benedictevans/2019/7/31/Netflix]. Evans says Netflix is a media company that uses technology “as a crowbar” to enter. He writes that the main drivers of the business Netflix is in content. While the technical aspects are impressive, they are quickly getting commoditized, lowering Netflix’s competitive advantage.

I wholeheartedly agree.

In fact, I am somewhat relieved that relatively influential (if not a bit controversial) figures like Evans can comfortable call a company like Netflix “a media company that uses” versus a “tech company”. This seems like a new development. Netflix is located right in Silicon Valley in Los Gatos. It has tons of engineers. It’s the N of the FAANG.

This does not mean that the technologists over at the company are not doing innovative, technically challenging work. But it means whatever work they do, the company will live and die mainly by its ability to create as much original content a possible. The rest, as they as, are on the margins.

https://www.readmargins.com/p/everything-is-a-tech-company-n...

>It’s the N of the FAANG

Which was 1.) Basically a stock market thing when the term was coined by Jim Cramer and 2.) Netflix was doing a bunch of cutting edge things with tech to enable its streaming platform at one point. Now, a streaming platform isn't something you just buy off-the-shelf but it's not a particular differentiator, relative to content, either.

That doesn't seem controversial. They also develop IoT devices now, of course, but aside from AWS, Amazon is fundamentally a retailer and logistics company. Back when they first came out, this kind of thing was called e-commerce and nobody called them a tech company. That terminology didn't really arise until later. Netflix, of course, was mail order video rental before they entered streaming, and sure, they eventually became known largely for their engineering and how well they scaled the ability to stream enormous amounts of data to huge numbers of consumers, but I don't see what they're doing right now that is any different from Disney and Warners now that those companies also run their own streaming services.

The reason they're a "FAANG" that people seem confused about is the acronym was created to describe enormous market cap companies that traded at large multiples of earnings way above what is typical for a blue chip stock. All of these companies had a large ratio of customers to employees as a common attribute, which can in some cases be attributed to the product largely being software-as-a-service that efficiently scales to large numbers of customers, but it was also the case that, other than Apple, they were all fairly young companies. Disney and Warners can't grow like that because they're already huge and have been for a century. That's what distinguishes the growth rate and market cap being out of line with current earnings, not the fact that one makes technology and the other doesn't.

Calling yourself a "tech" company eventually became a method of trying to justify multiples like that for your own company. On the successful side, you've got companies like Uber and AirBNB, fundamentally a taxi provider and property rental broker. On the less successful side, WeWork, which was just a basic landlord like that Simons company that owns all the malls or something, and didn't even make software at all, but wanted "tech" company valuations, so they branded that way.

Netflix didn't exactly invent streaming, either. Porn studios had video-on-demand served via websites 30 years ago. Netflix certainly did it bigger, but a lot of that is down to it being a lot easier to attract elite engineers and large investors when you're not a porn company.

For a time, Netflix had the only competently executed streaming service and no original content. Over time, good-enough video streaming became commoditized and Netflix's competitive advantage shifted into its original content.

Sounds about right.

I struggle to think of any manner in which Netflix can, today, be considered a 'tech' company. They originally were a DVD rental service, then they developed in-house a media-streaming service which briefly gave them a lead but soon became a commodity across the media industry, and now they compete with other media companies on the basis of their content library.

I'm sure they employ lots of software programmers, but so does Disney.

They pay tech company salaries? That's about it for why it's in FAANG.

"Tech company salaries" is itself kind of begging the question -- if a technology or software company pays a low salary, is it not a tech company? For that matter, I hear the salaries are pretty high at Goldman Sachs too.

When the term FAANG was coined, those 5 companies were paying engineers around double what they could ask for anywhere else. I believe that's when software engineers started grouping them together. It became a goal for many young engineers to join because of the fantastic salaries/benefits.

Things have changed since then but the point remains, FAANG generally means "large company that pays above market for software developers."

Netflix is a FAANG company because it's the 'N' in FAANG. It's just not a tech company.

It says it in the article: it's what their business model is like. Netflix pays a bunch of money in R&D and then has a low marginal cost for each additional customer, who are on a subscription (like so many SaaS businesses). Disney, if it was just Disney+, would probably be thought of as a tech company, but Disney is also all about their intellectual property and the ways to monetize that: movies, parks, and merch.

Disney's interesting because it's not just another media company, so what category does it fit in? Perhaps it's big enough that folks are just "Disney" analysts. Speaking of hydra, how do you analyze the stock prices for companies like Sony? They make movies, music, TVs, video games/consoles, cameras (high-end for professionals), phones, CMOS camera sensors, and probably others I'm not even aware of.

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