The theory was one of economies of scale. For exclusive in-house content, you should have a positive feedback loop of "more users" -> "bigger content budget" ->

The theory was one of economies of scale. For exclusive in-house content, you should have a positive feedback loop of "more users" -> "bigger content budget" -> "better or more content" -> "more users". And the theory was that with their headstart they could basically build such a large user base and content pipeline that nobody else could catch up. It was a solid theory, and honestly it still isn't obvious that it's failed. Netflix still has an much larger user base than any of the competing services, despite charging much higher prices. But other than the stellar job they did with international content, they certainly haven't executed on this as well as people imagined. It's quite amazing how badly they have been spending that massive content budget, and how long the mismanagement has been going on. (Their prestige "Hollywood movies at Hollywood budgets straight to streaming" projects are probably the most obvious example. Who the fuck greenlit Gray Man at $200M?)