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The cost of delivering the video decreases over time and unlike Netflix which has to pay for content YouTube doesnt which gives it tremendously better margins.

by raiyu 6y ago

The cost of delivering the video decreases over time and unlike Netflix which has to pay for content YouTube doesnt which gives it tremendously better margins. Just look at the debt load of Netflix. The cost of acquiring content is so much greater than serving it especially now that every traditional media company has launched its own streaming service. Also you can never compete with the viewer numbers between a product that is paid versus free so the most that YouTube has established is clearly much greater and visible in that it has no direct competition in the user generated video space for 15 years until perhaps maybe tiktok but tremendously different platforms. Meanwhile Netflix has competition from Amazon Prime, Disney, Hulu, HBO, and others.

vsskanth 6y ago
>The cost of delivering the video decreases over time and unlike Netflix which has to pay for content YouTube doesnt which gives it tremendously better margins. Youtube has to share it's revenue with content creators, unlike Netflix. >The cost of acquiring content is so much greater than serving it especially now that every traditional media company has launched its own streaming service. Does this hold true for constantly changing HD video content, unlike traditional media ?
- reaperducer 6y ago
  Youtube has to share it's revenue with content creators, unlike Netflix. I don't know if this is true. I can't say that I know the inner workings of any of the Netflix contracts, but in entertainment it is common to not only pay to acquire the rights to display the content, but then to pay again for each time it is viewed. Sometimes it's paid monthly or yearly. In other cases (broadcast television, for example), it's part of the negotiating process for content renewal. ("Oh, the ratings for our show on your station are up 40%, so we want more money to renew.")
  - AnssiH 6y ago
    Netflix content contracts are typically fixed-fee ones (source: https://ir.netflix.net/ir-overview/top-investor-questions/default.aspx https://ir.netflix.net/ir-overview/top-investor-questions/de... section "How do you account for streaming content licensing?"). The providers of course generally want more money the more popular a title is (though Netflix does not usually disclose viewership numbers so they may have to rely on Nielsen etc.).
- dig1 6y ago
  > Youtube has to share it's revenue with content creators, unlike Netflix. Depends on the contract. That is why you see more and more content produced by Netflix, where they control the complete chain. However, producing Netflix content has an initial cost, but producing YouTube videos does not (for Google) and the videos are monetized only if the number of viewers are increased. Which also increases ad earning to Google. Google might be in a much better position here regarding streaming quality (or traffic reduction control). You get YouTube videos for free and even if you request HD content, you don't have to get it every time; no one can complain because it is free. However, for Netflix, you pay for HD quality and you expect that almost always.
  - sosborn 6y ago
    Google's production cost is uploading bandwidth and storage. If you look at a single popular video it's easy to think, "Oh, that's nothing." But consider the massive amount of video uploaded that only gets 1 - 10 views over its lifetime.
    - ls612 6y ago
      Some back of the envelope math suggests that a 30 minute video needs about 10 views a month to pay for its storage. So clearly there’s some amount of the popular stuff subsidizing the unpopular stuff but the break even point is much further down the long tail than people realize.
- MR4D 6y ago
  > Youtube has to share it's revenue with content creators, unlike Netflix. From a financial modeling perspective, that’s more akin to a tax paid by YouTube than anything else, which makes it easy to plan for. That’s not the case with Netflix, which has all sorts of competition bidding up costs and making content costs much more difficult to predict per unit of revenue.
  - kfarr 6y ago
    Correct, YouTube has much more favorable (lower) content cost model than Netflix
jbverschoor 6y ago
Youtube keeps adding and adding content. Even though storage is nearly free in capex, it still has opex costs. Netflix on the other hand has small selection, which gets purged frequently.
- fakedang 6y ago
  Isn't YouTube now actively throwing out old content?
  - deleted 6y ago
    [deleted]
  - cute_boi 6y ago
    any proof? I can still see my content from 20 years(probably) ago .
    - dredmorbius 6y ago
      Likely no more than 15 years ago, unless you just broke embargo on the Tardis project. https://en.wikipedia.org/wiki/Youtube https://en.wikipedia.org/wiki/Youtube
  - kevincox 6y ago
    Not that I am aware of. It is possible that they are throwing away different quality transcodes of old and unpopular content and regenerating on the fly if needed. But my understanding is that videos are never automatically removed.
    - ForHackernews 6y ago
      > videos are never automatically removed. Unless the video trips some automated DMCA thing, or the owner of the video account runs afoul of some inscrutable algorithm, or journalists start asking about disturbing videos aimed at children, or... But yes, probably not to save money on storage.

by raiyu 6y ago

vsskanth 6y ago

>The cost of delivering the video decreases over time and unlike Netflix which has to pay for content YouTube doesnt which gives it tremendously better margins. Youtube has to share it's revenue with content creators, unlike Netflix. >The cost of acquiring content is so much greater than serving it especially now that every traditional media company has launched its own streaming service. Does this hold true for constantly changing HD video content, unlike traditional media ?

reaperducer 6y ago
Youtube has to share it's revenue with content creators, unlike Netflix. I don't know if this is true. I can't say that I know the inner workings of any of the Netflix contracts, but in entertainment it is common to not only pay to acquire the rights to display the content, but then to pay again for each time it is viewed. Sometimes it's paid monthly or yearly. In other cases (broadcast television, for example), it's part of the negotiating process for content renewal. ("Oh, the ratings for our show on your station are up 40%, so we want more money to renew.")
- AnssiH 6y ago
  Netflix content contracts are typically fixed-fee ones (source: https://ir.netflix.net/ir-overview/top-investor-questions/default.aspx https://ir.netflix.net/ir-overview/top-investor-questions/de... section "How do you account for streaming content licensing?"). The providers of course generally want more money the more popular a title is (though Netflix does not usually disclose viewership numbers so they may have to rely on Nielsen etc.).
dig1 6y ago
> Youtube has to share it's revenue with content creators, unlike Netflix. Depends on the contract. That is why you see more and more content produced by Netflix, where they control the complete chain. However, producing Netflix content has an initial cost, but producing YouTube videos does not (for Google) and the videos are monetized only if the number of viewers are increased. Which also increases ad earning to Google. Google might be in a much better position here regarding streaming quality (or traffic reduction control). You get YouTube videos for free and even if you request HD content, you don't have to get it every time; no one can complain because it is free. However, for Netflix, you pay for HD quality and you expect that almost always.
- sosborn 6y ago
  Google's production cost is uploading bandwidth and storage. If you look at a single popular video it's easy to think, "Oh, that's nothing." But consider the massive amount of video uploaded that only gets 1 - 10 views over its lifetime.
  - ls612 6y ago
    Some back of the envelope math suggests that a 30 minute video needs about 10 views a month to pay for its storage. So clearly there’s some amount of the popular stuff subsidizing the unpopular stuff but the break even point is much further down the long tail than people realize.
MR4D 6y ago
> Youtube has to share it's revenue with content creators, unlike Netflix. From a financial modeling perspective, that’s more akin to a tax paid by YouTube than anything else, which makes it easy to plan for. That’s not the case with Netflix, which has all sorts of competition bidding up costs and making content costs much more difficult to predict per unit of revenue.
- kfarr 6y ago
  Correct, YouTube has much more favorable (lower) content cost model than Netflix

jbverschoor 6y ago

Youtube keeps adding and adding content. Even though storage is nearly free in capex, it still has opex costs. Netflix on the other hand has small selection, which gets purged frequently.

fakedang 6y ago
Isn't YouTube now actively throwing out old content?
- deleted 6y ago
  [deleted]
- cute_boi 6y ago
  any proof? I can still see my content from 20 years(probably) ago .
  - dredmorbius 6y ago
    Likely no more than 15 years ago, unless you just broke embargo on the Tardis project. https://en.wikipedia.org/wiki/Youtube https://en.wikipedia.org/wiki/Youtube
- kevincox 6y ago
  Not that I am aware of. It is possible that they are throwing away different quality transcodes of old and unpopular content and regenerating on the fly if needed. But my understanding is that videos are never automatically removed.
  - ForHackernews 6y ago
    > videos are never automatically removed. Unless the video trips some automated DMCA thing, or the owner of the video account runs afoul of some inscrutable algorithm, or journalists start asking about disturbing videos aimed at children, or... But yes, probably not to save money on storage.