Comment by ethbr1 | Hacker News Reader

Comment by ethbr1 | Hacker News Reader

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I read history a bit differently.

Netflix bought DVDs to ship out as rentals. Content providers had no say (first sale doctrine?).

Netflix then saw that streaming was going to eat the legacy physical-disc market and pivoted.

At this point, streaming was a new revenue stream. Most content provider money was still coming through cable/broadcast. So they said "Sure, we'll license you a bunch of stuff for cheap to do this thing we don't care about."

Streaming's growth led to it overtaking other revenue streams. At this point, content providers looked at the numbers and said "The main channel for eyeballs is getting our content for cheap. We should do something about that."

And then built their own streaming services, e.g. Hulu.

The biggest miss here seems to be by Google and Microsoft. Why, for the love of profit, didn't they say "Hmm, we have data centers, software expertise, and bandwidth... let's build a B2B streaming platform offering for content providers."

The missing piece here is that streaming was not profitable for a very long time, and all the studios and content producers cannibalized their existing profitable businesses to make equally unprofitable deals with Netflix, just to be where all the users were going.

Now that industry is stuck in a situation where they wrecked their own income streams, expectations have been set with customers about what streaming costs, and they are scrambling to figure out how to re-gain that income but no one wants to go back to those pre-streaming prices.

This whole problem was one of the foundational issues behind the recent writer and actor strikes.

The people who write the movies, build the sets and act in the films are in guilds. Surprised there wasn’t a more direct-to-consumer avenue to explore. Maybe they could bootstrap a production and distribution guild.

I've wondered this as well..

I think Netflix, Amazon and Apple were sort of that for a while, with all the deals they were cutting with production companies..

But in the end it was just Meet the new boss, same as the old boss..

https://en.m.wikipedia.org/wiki/United_Artists

At the end, it's the startup problem. Would you rather gamble all your money and get all the winnings? Or get a salary regardless of how things turn out?

This was the original idea behind United Artists from its formation in 1919 until it got bought out by Transamerica in 1967.

> The biggest miss here seems to be by Google and Microsoft.

Bear in mind that you’re talking about Ballmer-era mobile’s-no-big-deal Microsoft here, not Nadella-era reimagine-the-company-around-cloud-and-services Microsoft. That kind of smart strategic offering was never going to happen during the time period it would’ve needed to happen.

> Netflix then saw that streaming was going to eat the legacy physical-disc market and pivoted.

Netflix was started with streaming in mind from the outset. It's in the name, for one thing. They didn't pivot, (they only stopped their DVD mailing service this year, I believe,) they just started streaming as soon as the hardware, software, and network could be built up to a point where it was feasible financially.

Netflix was founded in 1997. DVDs were brand new technology and dialup was the primary means of accessing the internet. They didn't begin streaming until a decade after that. They were called Netflix because you could rent movies on the internet.

Reed Hastings says otherwise.

Netflix was always intending to stream movies via the Internet. it wasn't possible when the company was founded, but streaming was the vision from the outset. they began the dvd-shipping service to build the company and bootstrap their way to the streaming service.

I've read this in multiple places, but I'm not going to do your homework for you.

Unless he produces documents from around the founding period where he says that, I'll treat Reed Hastings' comments as nothing more than puffery.

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