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I rarely see this discussed, but in this case, and many others, I think a large portion of AWS's adoption stems from how taxes work. Because AWS can be written

I rarely see this discussed, but in this case, and many others, I think a large portion of AWS's adoption stems from how taxes work. Because AWS can be written off as an "operating expenditure" immediately, it is far more tax advantageous than a "capital expenditure" that must be depreciated/amortized over several years. I'm not an expert on movie financials, it could be that the way graphics/vfx houses and production companies are compensated to do films this doesn't actually matter. But I feel like this point is generally under discussed for how much of an impact it has on companies choosing whether to go cloud or buy their own hardware.

tootie 4y ago
That's not how that works at all. CapEx is more advantaged than OpEx. OpEx does not get written off at all. CapEx can be depreciated.
- TeMPOraL 4y ago
  Surely this is not the case, otherwise I wouldn't hear the constant refrain of "opex > capex" over the past decade, as sung to argue SaaS is the best thing.
  - tootie 4y ago
    Apples to apples CapEx is better for the reason I described. The shift to OpEx and the rise of SaaS is more attributable to short-term budget flexibility. Taking depreciation is a tax advantage but only because the thing you own is depreciating. It's not free money. Capital expenditures usually require a large upfront cost, slow time to market and unpredictable scaling and maintenance. SaaS is usually turnkey, can scale up and down to match usage, and has less lockin. The benefits frequently outweigh the tax disadvantage.
  - leonth 4y ago
    Opex is "better" than capex, because cash is king. Capex in general means you pay upfront and reap benefits later. Opex in general means you reap benefits now and pay later (via invoice or credit card bill).
joshspankit 4y ago
It may be an important component that movies have moved to a “corporation per movie” model. There are other structures on top of course, but the point is that making a movie often starts with the incorporation papers being filed.

tootie 4y ago

That's not how that works at all. CapEx is more advantaged than OpEx. OpEx does not get written off at all. CapEx can be depreciated.

TeMPOraL 4y ago
Surely this is not the case, otherwise I wouldn't hear the constant refrain of "opex > capex" over the past decade, as sung to argue SaaS is the best thing.
- tootie 4y ago
  Apples to apples CapEx is better for the reason I described. The shift to OpEx and the rise of SaaS is more attributable to short-term budget flexibility. Taking depreciation is a tax advantage but only because the thing you own is depreciating. It's not free money. Capital expenditures usually require a large upfront cost, slow time to market and unpredictable scaling and maintenance. SaaS is usually turnkey, can scale up and down to match usage, and has less lockin. The benefits frequently outweigh the tax disadvantage.
- leonth 4y ago
  Opex is "better" than capex, because cash is king. Capex in general means you pay upfront and reap benefits later. Opex in general means you reap benefits now and pay later (via invoice or credit card bill).

joshspankit 4y ago

It may be an important component that movies have moved to a “corporation per movie” model. There are other structures on top of course, but the point is that making a movie often starts with the incorporation papers being filed.