Netflix has the most scale of any streaming service. They have the most subscribers, the most content, and the largest content budget. This scale advantage benefits their business in many ways.

Having the most users allows Netflix to buy content cheaper than their competitors on a per user basis. The cost of a new show gets spread over Netflix’s 139 million paying members while their competitors have to spread that same cost over a far smaller membership base. All things being equal, Netflix can pay more than their competitors for a piece of content and still get the same, or better, return on their investment.
Continue reading “Netflix: The Powerful Combination of Scale and Network Effects” →