46 ms·

Apple, Amazon, and Common Enemies

113 points by davidmckenna 7y ago

fxtentacle 6y ago
TLDR: Both are afraid of Netflix making channel subscriptions superfluous. It's an interesting read with lots of explanations.
- mlthoughts2018 6y ago
  I think this whole way of thinking about Netflix is dumb though, e.g. “ Netflix dominating means that shows are sold directly to Netflix.” Netflix is not good at creating content. As time goes forward, Netflix is even less good as they need to cater to mass markets, thereby losing niche markets, and without having a brand or catalog like a Disney, or live sports, or trusted news, etc. Netflix is not a business entity I would long. It is absolutely a fad, and will lose negotiating power to distributors and content creators.
  - xkjkls 6y ago
    > Netflix is not good at creating content. Why would you say that? These days, many of the most talked about and watched shows are Netflix content. Like for instance, Tiger King is the most talked about show in America right now, Netflix owned and produced. > Netflix is not a business entity I would long. It is absolutely a fad, and will lose negotiating power to distributors and content creators. This seems to be a five plus year ago view on the company. They've pivoted mostly to making original content at this point, which in my mind is the hardest reason to be long them. They've had to accumulate enormous debt to produce all of this content and have exclusive ownership rights, which makes their balance sheet look terrible.
    - eitally 6y ago
      I think a perhaps more accurate way of stating the position is that "Netflix is not good enough at creating enough good content [to make up for 1) existing back catalogs and 2) parallel activity from strong competition]. I don't think anyone could definitively state that Netflix content is subpar when it's at its best, but I also don't think anyone would suggest they'd be willing to give up the big studios and rely exclusively on Netflix original content.
      - Talanes 6y ago
        As things start to fracture more and more, the big studios kind of find themselves in the same position. Disney+ probably has one of the strongest single-publisher back catalogs, and there's still a lot of talk about there being nothing to watch after you finish the few originals and whatever old thing you were interested in.
        xkjkls 6y ago
        Yeah, Netflix has far more new exclusive content. And by that, I'm counting out all of the currently released movies Disney has also on Disney+, since many saw those in theaters.
        mark-r 6y ago
        Disney knows better than most how much appeal there is in movies that you've already seen.
      - xkjkls 6y ago
        Content ages. People want new topical content. Even someone who owned the entire criterion collection would still have problems.
    - bigphishy 6y ago
      Too true, I hardly hear about trending media, I try to avoid it, but my housemate told me about tiger king yesterday.
  - tehwebguy 6y ago
    I think that may have been true at some point but they aren't really a distribution company, for almost a decade they've been a content publisher with their own distribution.
  - bsder 6y ago
    > Netflix is not good at creating content. Neither is anybody else. It's a random crapshoot. To be fair, though, Netflix seems to be doing a bit better than random. Disney+ has a huge advantage in that they have a significant back catalog that people actually want. Everybody else can basically be ignored. Amazon will blink first to Disney+ and Netflix terms, and Apple will be forced to follow or be irrelevant in video.
    - notriddle 6y ago
      > Netflix is not good at creating content. The difference is that the others don't have to be good at creating content. Amazon, Google, and Apple have a bunch of other businesses to prop up their streaming services. And Disney doesn't have to be good at creating new content because they've got so much enviable OLD content. But if NetFlix can't keep people coming back, then the company goes under. NetFlix can't just run their streaming service at a loss until everybody else dies like Amazon, they can't rely in pure brand recognition like Disney, they can't rely on sheer volume like YouTube Premium, and they can't just charge more because they're not Apple.
- three_seagrass 6y ago
  Yeah, I don't agree with their analysis of Disney+ either. It's as you say, these big corps are trying to claw back revenue that Netflix has been enjoying. I doubt the reason Disney really went into Disney+ was to enhance the Disney magic experience or whatever. Maybe if Walt were still alive. It seems more likely that Disney did the cost/benefit analysis and decided that Netflix subscriptions were not zero sum and that parents would definitely pay for another subscription for Frozen and other shows.
  - TrainedMonkey 6y ago
    Disney+ is more than just a revenue stream. It is a sales channel for their brand. If you have Disney+ you are going to watch more Disney content... and if you watch more content you are going to buy more merchandise (0). Modern Disney is a brand company making money from selling merchandise (1). Even more importantly Disney+ is a platform. Most little girls in western countries (3) already dream of being a princess. So if you provide a channel which parents can subscribe to put their kids in front of the TV... that is a tremendous value proposition for both sides. Parents because kids are out of their hair while watching family friendly shows and disney because see my previous point. 0. In my humble opinion. I have not done any research, but having disney+ -> watching more disney -> becoming a fan and buying their stuff makes sense to me. 1. $54.7bn from merchandise in 2019 with next highest revenue source bringing in $24.8bn - https://www.statista.com/topics/1824/disney/ https://www.statista.com/topics/1824/disney/ 3. Like every single 5 yo girl I've met... which is actually not a big number, so maybe not most little girls, but still a pretty sizeable portion.
    - three_seagrass 6y ago
      Until you can purchase merchandise inside Disney+ it's as much a sales channel as HBO Go is for Game of Thrones.
modsRapple 6y ago
"Apple’s dominant position in portable devices, particularly the high end." Is this person unfamiliar with technology specs because their products are average devices but cost excessive for what you get? It seriously sounds like they fell for the marketing.
- manuelflara 6y ago
  Not sure what you mean, but iPads and iPhones are high end portable devices in a market in which Apple holds a dominant position.
  - thanatos_dem 6y ago
    Brand new account, named “modsRapple”, with only this comment. Safe to ignore.
    - modsRapple 6y ago
      Ahh because rational argument doesn't count because of a name? Be careful Thanatos, don't rely on tradition and authority figures. That's pre scientific method ways of thinking.
      - askafriend 6y ago
        Nothing about your argument was rational. All you made clear was that you do not understand what Apple's customers value. Hint: It's not a technology spec sheet. And even if it was, their specs blow the competition out of the water. I think your focus on embedded systems is coloring your view of consumer technology.
- xkjkls 6y ago
  They own basically all consumers making six figure salaries. That is the high end customer base Ben is talking about.
  - modsRapple 6y ago
three_seagrass 6y ago
It's still baffling that Apple is allowed to have such strict controls over their platform while still competing with the products they're charging rent to to be on it (i.e. iTunes & Spotify). I get why some make the analogy with Grocery Stores and stocking their in-house brands (e.g. Safeway with Signature, Apple with iTunes), but with Apple, it's like the customer has already bought the grocery store and Apple is still charging rent on their shelves. At least it looks like they're loosening the controls a bit with deals, but that's only for big overlapping partners like Amazon.
- yazaddaruvala 6y ago
  This might be an unpopular opinion on HN, but I don't only pay Apple for the smartphone's hardware. I'm also paying Apple to curate my experience. As a developer, I understand wanting to get access to a large user base. I understand wanting to keep costs down, especially as an indie dev. And I definitely understand wanting to keep my margins high, to fund better development but also retire early! As a customer, I'd prefer even stricter controls on the app store and even more curation to keep pushing the application quality higher. If Apple needs to charge developers to ensure the quality of applications is constantly improving, then I'm happy they do. I'm also happy to wait for a killer app[1], deploy it to Android first and then bring it over to iOS when the demand is enough to negotiate with Apple. [1] e.g. When I switched over to iOS I had to give up Swiping to type on my keyboard, for a few years till iOS was able to catch up. I understood Apple's rationale and waited. Now with iOS and a Swipe keyboard I am an even happier customer.
  - askafriend 6y ago
    > I'm also paying Apple to curate my experience 100% agree. I pay the premium because of the walled garden. I prefer it. I want Apple to have a tight grip over suppliers. I want Apple to have a tight grip over the experience on their platforms. I want Apple to have a tight grip over their 3rd party developers. In fact, I say this as an engineer myself; I even develop for Apple's platform so I'm impacted by their dev-facing decisions! In my nearly 2 decade history with Apple as a customer, I often align with their principles and I want them to make decisions for me. I do not value an open platform. I only value a good user experience and I value my problems being solved in consistent and elegant ways with a focus on design. People act as if customers are somehow duped into the walled garden. NO! That's missing the entire thesis of Apple and the driving force behind their success. This is my opinion and you don't have to agree with it. I almost never express this opinion in discussions like this because why bother. But I figured it's helpful for others to see this opinion represented.
enos_feedler 6y ago
>Content has extremely high fixed costs, and zero marginal costs; it follows, then, that the fiscally responsible content producers sell that content to as many outlets as possible I wonder if this means Netflix may try to maximize some of it's best content more by taking out of streaming inventory and charging to purchase/rent individual series and movies? all within the Netflix app?
- sjg007 6y ago
  Netflix doesn’t need or want to segment the market. Most consumers will stick with one streaming service that is good enough. Apple needs transactions. Netflix needs subscriptions. Amazon takes both but really only wants prime members. Amazon is actually useful though because you can consolidate HBO, showtime etc.. under a single login. It can work under Apple but it’s a lot harder to switch between devices.

113 points by davidmckenna 7y ago

TLDR: Both are afraid of Netflix making channel subscriptions superfluous. It's an interesting read with lots of explanations.

mlthoughts2018 6y ago
I think this whole way of thinking about Netflix is dumb though, e.g. “ Netflix dominating means that shows are sold directly to Netflix.” Netflix is not good at creating content. As time goes forward, Netflix is even less good as they need to cater to mass markets, thereby losing niche markets, and without having a brand or catalog like a Disney, or live sports, or trusted news, etc. Netflix is not a business entity I would long. It is absolutely a fad, and will lose negotiating power to distributors and content creators.
- xkjkls 6y ago
  > Netflix is not good at creating content. Why would you say that? These days, many of the most talked about and watched shows are Netflix content. Like for instance, Tiger King is the most talked about show in America right now, Netflix owned and produced. > Netflix is not a business entity I would long. It is absolutely a fad, and will lose negotiating power to distributors and content creators. This seems to be a five plus year ago view on the company. They've pivoted mostly to making original content at this point, which in my mind is the hardest reason to be long them. They've had to accumulate enormous debt to produce all of this content and have exclusive ownership rights, which makes their balance sheet look terrible.
  - eitally 6y ago
    I think a perhaps more accurate way of stating the position is that "Netflix is not good enough at creating enough good content [to make up for 1) existing back catalogs and 2) parallel activity from strong competition]. I don't think anyone could definitively state that Netflix content is subpar when it's at its best, but I also don't think anyone would suggest they'd be willing to give up the big studios and rely exclusively on Netflix original content.
    - Talanes 6y ago
      As things start to fracture more and more, the big studios kind of find themselves in the same position. Disney+ probably has one of the strongest single-publisher back catalogs, and there's still a lot of talk about there being nothing to watch after you finish the few originals and whatever old thing you were interested in.
      - xkjkls 6y ago
        Yeah, Netflix has far more new exclusive content. And by that, I'm counting out all of the currently released movies Disney has also on Disney+, since many saw those in theaters.
        mark-r 6y ago
        Disney knows better than most how much appeal there is in movies that you've already seen.
    - xkjkls 6y ago
      Content ages. People want new topical content. Even someone who owned the entire criterion collection would still have problems.
  - bigphishy 6y ago
    Too true, I hardly hear about trending media, I try to avoid it, but my housemate told me about tiger king yesterday.
- tehwebguy 6y ago
  I think that may have been true at some point but they aren't really a distribution company, for almost a decade they've been a content publisher with their own distribution.
- bsder 6y ago
  > Netflix is not good at creating content. Neither is anybody else. It's a random crapshoot. To be fair, though, Netflix seems to be doing a bit better than random. Disney+ has a huge advantage in that they have a significant back catalog that people actually want. Everybody else can basically be ignored. Amazon will blink first to Disney+ and Netflix terms, and Apple will be forced to follow or be irrelevant in video.
  - notriddle 6y ago
    > Netflix is not good at creating content. The difference is that the others don't have to be good at creating content. Amazon, Google, and Apple have a bunch of other businesses to prop up their streaming services. And Disney doesn't have to be good at creating new content because they've got so much enviable OLD content. But if NetFlix can't keep people coming back, then the company goes under. NetFlix can't just run their streaming service at a loss until everybody else dies like Amazon, they can't rely in pure brand recognition like Disney, they can't rely on sheer volume like YouTube Premium, and they can't just charge more because they're not Apple.
three_seagrass 6y ago
Yeah, I don't agree with their analysis of Disney+ either. It's as you say, these big corps are trying to claw back revenue that Netflix has been enjoying. I doubt the reason Disney really went into Disney+ was to enhance the Disney magic experience or whatever. Maybe if Walt were still alive. It seems more likely that Disney did the cost/benefit analysis and decided that Netflix subscriptions were not zero sum and that parents would definitely pay for another subscription for Frozen and other shows.
- TrainedMonkey 6y ago
  Disney+ is more than just a revenue stream. It is a sales channel for their brand. If you have Disney+ you are going to watch more Disney content... and if you watch more content you are going to buy more merchandise (0). Modern Disney is a brand company making money from selling merchandise (1). Even more importantly Disney+ is a platform. Most little girls in western countries (3) already dream of being a princess. So if you provide a channel which parents can subscribe to put their kids in front of the TV... that is a tremendous value proposition for both sides. Parents because kids are out of their hair while watching family friendly shows and disney because see my previous point. 0. In my humble opinion. I have not done any research, but having disney+ -> watching more disney -> becoming a fan and buying their stuff makes sense to me. 1. $54.7bn from merchandise in 2019 with next highest revenue source bringing in $24.8bn - https://www.statista.com/topics/1824/disney/ https://www.statista.com/topics/1824/disney/ 3. Like every single 5 yo girl I've met... which is actually not a big number, so maybe not most little girls, but still a pretty sizeable portion.
  - three_seagrass 6y ago
    Until you can purchase merchandise inside Disney+ it's as much a sales channel as HBO Go is for Game of Thrones.

modsRapple 6y ago

"Apple’s dominant position in portable devices, particularly the high end." Is this person unfamiliar with technology specs because their products are average devices but cost excessive for what you get? It seriously sounds like they fell for the marketing.

manuelflara 6y ago
Not sure what you mean, but iPads and iPhones are high end portable devices in a market in which Apple holds a dominant position.
- thanatos_dem 6y ago
  Brand new account, named “modsRapple”, with only this comment. Safe to ignore.
  - modsRapple 6y ago
    Ahh because rational argument doesn't count because of a name? Be careful Thanatos, don't rely on tradition and authority figures. That's pre scientific method ways of thinking.
    - askafriend 6y ago
      Nothing about your argument was rational. All you made clear was that you do not understand what Apple's customers value. Hint: It's not a technology spec sheet. And even if it was, their specs blow the competition out of the water. I think your focus on embedded systems is coloring your view of consumer technology.
xkjkls 6y ago
They own basically all consumers making six figure salaries. That is the high end customer base Ben is talking about.
- modsRapple 6y ago

three_seagrass 6y ago

It's still baffling that Apple is allowed to have such strict controls over their platform while still competing with the products they're charging rent to to be on it (i.e. iTunes & Spotify). I get why some make the analogy with Grocery Stores and stocking their in-house brands (e.g. Safeway with Signature, Apple with iTunes), but with Apple, it's like the customer has already bought the grocery store and Apple is still charging rent on their shelves. At least it looks like they're loosening the controls a bit with deals, but that's only for big overlapping partners like Amazon.

yazaddaruvala 6y ago
This might be an unpopular opinion on HN, but I don't only pay Apple for the smartphone's hardware. I'm also paying Apple to curate my experience. As a developer, I understand wanting to get access to a large user base. I understand wanting to keep costs down, especially as an indie dev. And I definitely understand wanting to keep my margins high, to fund better development but also retire early! As a customer, I'd prefer even stricter controls on the app store and even more curation to keep pushing the application quality higher. If Apple needs to charge developers to ensure the quality of applications is constantly improving, then I'm happy they do. I'm also happy to wait for a killer app[1], deploy it to Android first and then bring it over to iOS when the demand is enough to negotiate with Apple. [1] e.g. When I switched over to iOS I had to give up Swiping to type on my keyboard, for a few years till iOS was able to catch up. I understood Apple's rationale and waited. Now with iOS and a Swipe keyboard I am an even happier customer.
- askafriend 6y ago
  > I'm also paying Apple to curate my experience 100% agree. I pay the premium because of the walled garden. I prefer it. I want Apple to have a tight grip over suppliers. I want Apple to have a tight grip over the experience on their platforms. I want Apple to have a tight grip over their 3rd party developers. In fact, I say this as an engineer myself; I even develop for Apple's platform so I'm impacted by their dev-facing decisions! In my nearly 2 decade history with Apple as a customer, I often align with their principles and I want them to make decisions for me. I do not value an open platform. I only value a good user experience and I value my problems being solved in consistent and elegant ways with a focus on design. People act as if customers are somehow duped into the walled garden. NO! That's missing the entire thesis of Apple and the driving force behind their success. This is my opinion and you don't have to agree with it. I almost never express this opinion in discussions like this because why bother. But I figured it's helpful for others to see this opinion represented.

enos_feedler 6y ago

>Content has extremely high fixed costs, and zero marginal costs; it follows, then, that the fiscally responsible content producers sell that content to as many outlets as possible I wonder if this means Netflix may try to maximize some of it's best content more by taking out of streaming inventory and charging to purchase/rent individual series and movies? all within the Netflix app?

sjg007 6y ago
Netflix doesn’t need or want to segment the market. Most consumers will stick with one streaming service that is good enough. Apple needs transactions. Netflix needs subscriptions. Amazon takes both but really only wants prime members. Amazon is actually useful though because you can consolidate HBO, showtime etc.. under a single login. It can work under Apple but it’s a lot harder to switch between devices.