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But the surge in revenue from doubling subscribers would (way) more than cover any costs in infrastructure spending. This would not drive any increase in subscr

But the surge in revenue from doubling subscribers would (way) more than cover any costs in infrastructure spending. This would not drive any increase in subscription cost, which is purely governed by the competition and content acquisition costs, paired with whatever magic number the major investors/board decides is an acceptable profit margin.

toast0 5y ago
A doubling in subscribers might need a trippling in customer service agents (especially if the new customers are not as good at tech and need more help, which goes along with being a late adopter or if the service quality drops because of the presumed doubled usage, and there's more service requests as a result). If the doubled subscribers requires doubling the number of Netflix OpenConnect CDN boxes, that would mean current capex, and while the additional revenue might eventually pay for it, there might need to be borrowing costs to get the equipment sooner rather than later. Also, right now is a tricky time to get lots more hardware, so a 2021 node might cost more than a 2020 node, even if they have the same capacity. All that said, without looking at their investor reports, I suspect they have some margin and cash on hand to make things work and mostly profit. They probably also have a target for spare CDN node capacity, because there's some pretty high variability of peak load on new releases and ISP install lead time can be super long. Also, they do a lot of efficiency work to make sure they can push as much traffic as possible from their nodes.
- spoonjim 5y ago
  Yes... those Netflix customer service agents
jeffreygoesto 5y ago
You have never tried to dig a new or more cables under the sidewalk or into the ocean, do you? What you kids think is "free" is in fact heavily subsidized by other people's money.
- iptrans 5y ago
  Very few fiber optic systems are run at capacity. Upgrading bandwidth is therefore a matter of new optics and router cards, not new cables. Furthermore new subsea cables bring down the unit cost of bandwidth. Far more subsea cables have been decommissioned due to them not being cost effective anymore rather than not working.
ComodoHacker 5y ago
The infrastructure is physical though, and thus is of limited supply. If you really had to double your capacity quickly, you'd have to take the computing power from someone else, at a cost. Every digital value chain ends up on something physical.

toast0 5y ago

A doubling in subscribers might need a trippling in customer service agents (especially if the new customers are not as good at tech and need more help, which goes along with being a late adopter or if the service quality drops because of the presumed doubled usage, and there's more service requests as a result). If the doubled subscribers requires doubling the number of Netflix OpenConnect CDN boxes, that would mean current capex, and while the additional revenue might eventually pay for it, there might need to be borrowing costs to get the equipment sooner rather than later. Also, right now is a tricky time to get lots more hardware, so a 2021 node might cost more than a 2020 node, even if they have the same capacity. All that said, without looking at their investor reports, I suspect they have some margin and cash on hand to make things work and mostly profit. They probably also have a target for spare CDN node capacity, because there's some pretty high variability of peak load on new releases and ISP install lead time can be super long. Also, they do a lot of efficiency work to make sure they can push as much traffic as possible from their nodes.

spoonjim 5y ago
Yes... those Netflix customer service agents

jeffreygoesto 5y ago

You have never tried to dig a new or more cables under the sidewalk or into the ocean, do you? What you kids think is "free" is in fact heavily subsidized by other people's money.

iptrans 5y ago
Very few fiber optic systems are run at capacity. Upgrading bandwidth is therefore a matter of new optics and router cards, not new cables. Furthermore new subsea cables bring down the unit cost of bandwidth. Far more subsea cables have been decommissioned due to them not being cost effective anymore rather than not working.

ComodoHacker 5y ago

The infrastructure is physical though, and thus is of limited supply. If you really had to double your capacity quickly, you'd have to take the computing power from someone else, at a cost. Every digital value chain ends up on something physical.