3 ms·

Strictly speaking, these are scale economies, not network effects.

• nkrode 9y ago
  That is orthogonal to the network effect you see at play here, not contradictory
  • brucephillips 9y ago
    Network effects occur when usage increases the value of the product, as with Google or Facebook. With Netflix, usage does not increase value. It instead creates more revenue, enabling Netflix to invest in fixed costs, creating scale economies. To illustrate, if Netflix were boundlessly funded in their early days, they could create a product that's just as valuable as it is today, even though they had no customers, and therefore no network effects. The one caveat is that friends talking about shows with each other does create real network effects, but not what you're describing here. Cheers
    • mrexroad 9y ago
      Could also view it as... more usage == more data == more value