We Answer, Is Netflix a Technology Company or a Media Company?

It has been debated by many as to what is Netflix; is it a tech company or a content provider (i.e a media company)?

″[W]e’re really mostly a content company powered by tech,” Hastings, CEO of Netflix said, since the company spends $1.2 billion on technology and about $10 billion on video programming.

Investors treat Netflix like a high-growth tech company, giving it a market cap of about $179B USD on annual revenue of $29.7B USD and current earing (TTM) of $6.6B as of 2021. In comparison, Disney reported a market cap of $263.4 billion, revenue of $67.4 billion and earning of $4.11B.

Arguments to support each position are a plenty, but the salient point being missed is, why can't it be both? Here, the intent is to show both sides of the same coin and how both technology and content fuel each other.

Video summary of the article:

Netflix and the art of Chaos Engineering:

Chaos Engineering is a discipline of running experiments on a software code, to identify and address systems faults, before they can lead to a customer impacting outages.

Netflix is considered to be the innovator of this engineering concept. In 2010, when Netflix decided to migrate to the Amazon web services (AWS) cloud, the engineering team at Netflix created Chaos Monkey. The intent of Chaos Monkey was to test the resiliency and recoverability of Netflix software on AWS. 

On the heels of Chaos Monkey's success, the engineering team at Netflix proceeded to crate a suite of tools that supports Chaos Engineering principles, named the Simian Army. Chaos Engineering tools constantly test the system against different failure scenarios, which leads to a higher level of confidence in the system’s ability to survive.

What has all this engineering led to?

TechJury, has compiled an intriguing set of stats that show the breadth and depth of Netflix content, in a crowded streaming service industry.

  1. There were almost 208 million paying Netflix subscribers in Q1 of 2021.
  2. 47% of Americans prefer Netflix over any other video streaming service.
  3. Netflix is responsible for 8% of all time spent watching videos worldwide.
  4. Two Netflix movies won awards at the 2020 Oscars.
  5. Netflix is responsible for 14.92% of global application traffic share.
What about competition, how are they faring vs Netflix?

According to a New York Times (NYT) report in 2021, Parrot reported that Netflix’s share of total demand, a measure of the popularity of its shows, was slightly above 50 percent for the first three months 2021, compared with 54 percent a year ago and 65 percent in the first quarter of 2019. In other words, competitors such as Amazon, Hulu, Disney+, Apple TV and others, have started to encroach into Netflix’s dominance.
“It’s intensely competitive, but it always has been. We’ve been competing with Amazon Prime for 13 years, with Hulu for 14 years.” Hastings had reported in an earnings call.
Even with heightened competition, Netflix hit a milestone, when it reported it would no longer look to borrow money to fund its content slate. 

So, is Netflix a tech company or a media company?

It cannot be one without the other. If the engineering team does not innovate and ensure resliency, no one can watch the content. If the content was not good enough to keep the audience engaged, the technological innovations are of no use. Barring all type of legislative influences, Netflix, we believe is an Innovation driven firm, that utilizes it technology as an enabler to address the customer demands. So long, as this trend continues, Netflix will continue to be able to monetize, both its content and operations.