If you can provide a service to an additional subscriber at near zero overhead costs, near zero dollar sales and onboarding process, then you’re a tech company
the only reason additional industry specific questions exist is because they have so many simultaneous users that theyve reached theoretical maximums on their near-free resources
when other industries reach the same place, if at all ever possible, then we can split hairs over this distinction
We should stop thinking in terms of "tech companies" and think of them in terms of "companies that use tech with a high degree of success". Ultimately any company that makes money is not a tech company because pure technology on its own does not make a business. Also, with the right incentives and management it is possible, although hard, for legacy companies to start using tech better to compete.
How would you compare GM and Tesla using this framework? They're both very tech dependent given the impact of the chip shortage and electric car manufacture, but one is certainly more "novel." I'm honestly not sure where I would come out, but I think it's a good point of comparison for the framework as a result.
Tesla is an engineering based company. GM is a MBA based company.
It isn't that Tesla has no MBAs on staff or the GM has no engineers on staff. But a culture that leverages engineering culture can iterate and reinvent itself and include new technologies faster than one who is focused on management metrics.
I'm not saying that MBAs are bad, there are plenty of companies that went way to heavy on hiring engineers and went bankrupt before their business plan was viable.
How many "non-tech companies" are non-tech companies simply because they're too disfunctional to use technology effectively? Think of your bank with its shitty password rules, only offering 2FA using SMS, and no useful APIs; that's a non-tech company. They either aren't aware of their lackluster technology, or are unable to organize themselves well enough to improve it.
Or just have customers who mostly can't grasp authenticators. A friend worked for a company that implemented 2FA with the authenticator app. They removed it in a day as it ground the company to a halt.
I also tend to think the distinction is related to compartmentalizing all technical activities into an IT suborganization. A tech company performs all these activities as a matter of the regular course of business, within the lines of business organizations. A bank would have a dedicated IT organization, a few layers of 'governance' and human orchestrators to slow down your builders, and you get all the dysfunction you describe.
Better term would probably be revenue driver, which is typically what is meant by "profit center." In other words, IT brings sales contracts through the door.
For banks, online banking is a huge driver of business. Some banks have even started claiming (I suspect mostly for recruiting purposes) that they are "in tech sector".
Similar Point: "Hedge" and "Edge" share a lot of letters and semantics. If you are really good at dealing with tail risk (Pandemics, perhaps...) this not only allows you to rugged-ize and preserve your internals structures and practices in extreme circumstances but also potentially massively outcompete your competitors.
For a modern information-centric company, what does that mean? Get the technology right. Pay some smart people to get your internals ship-shape and reproducible, for example.
Large banks have an entire universe of challenges that don't impact firms like Netflix or Google. I've worked with enough of them and seen many high speed engineering folks from FAANG companies flounder for months as they try to recalibrate for the highly regulated environments.
I'm not saying banks are great at tech, because on any individual metric it would be really hard to find an example of where they lead, but they (and other highly regulated industries) have a lot more to solve for along the way.
What about companies that use tech to make tech and that people buy to incorporate into their tech? GitLab, Atlassian, 1Password and others. No physical products, just tech for your tech so you can make more tech.
I agree. What most HN commenters seem to really mean when they say "technology" is "consumer software", or more cynically, "company is made of mostly software engineers".
There is an incredible amount of advanced technology being created and used by more "traditional" industries like manufacturing, aerospace, or animation.
Why should Facebook be considered a technology company but not Pixar, Ratheon, General Dynamics, Corning or TSMC? It makes zero sense and relies on a very self-serving definition of "technology".
This whole argument seems a silly bit of semantics. Is a company's product is not "technology" a tech company?
For the vast majority of companies technology is tool, not the product, but whether you call them a "tech company" seems a silly game. I'd think pretty much all companies are "tech companies" and the better you are at using those tools can provide a competitive advantage.
> Ultimately any company that makes money is not a tech company because pure technology on its own does not make a business.
"X makes money, therefore they are not a tech company" seems rather oversimplified in the same way "X is a tech company" is oversimplified. Actually, it seems oversimplified to the point of maybe not being so useful.
I think the way most people would define "tech company," if they were pressed to offer a definition, is that a tech company is one that derives the bulk of their revenue from selling technological goods and services, rather than using technology as the means to sell other goods and services. There's no way to keep that definition from being somewhat fuzzy, but if I say "Dell is a technology company and Cadbury is not," I don't think people will really object to that unless they're trying to be pedantically clever about it: Cadbury may use technology in all sorts of clever ways to manufacture chocolates and get them to retail shelves, but they're selling you chocolates.
There are obviously companies that complicate this by having multiple divisions with different kinds of revenue streams -- Amazon and Apple both come to mind immediately -- but Netflix really isn't one of them. What they do requires a lot of focus on their technology, and from the perspective of someone perusing their job listings it's very easy to think of them as "a tech company." But what they're ultimately selling is access to their content.
There's a third category that you're missing, and it's where the definition gets real blurry.
There are companies that effectively use technology to outcompete (or "disrupt") incumbent companies in a market. Amazon in retail, Netflix in media, Craigslist for classifieds, Uber for taxis, etc.
It seems as if many existing companies, like Cadbury's perhaps, aren't able to effectively re-work their business models with the new possibilities available via tech. Thus they're "non-tech" companies even if they do make some modest use of technology, but ultimately their business model predates tech.
"Tech" companies in this space are the ones creating or adopting brand new business models in an existing space enabled by technology. This is the "software eating the world" part of the tech market.
I like this definition, but I think it should be associated with a strategy rather than a company.
So Netflix is using a tech strategy, but it won't forever be a tech company.
As the particular technology a company deploys becomes widespread, then everyone will deploy it and it will no longer be a tech company.
To put it another way: Netflix was not a tech company when it launched and was mailing DVDs, it became a tech company when it started its streaming service, and as other companies also launch streaming services, it won't be a technology company in the future.
We used to have a better word for companies doing things like the Amazon Marketplace: eCommerce. But now that AWS is most of their business, they're "tech" because cloud infrastructure is a computing technology they directly sell.
I really like the focus on strategy (or tools) rather than trying to label the company itself.
Across many industries, especially in the past several decades, companies have used (modern) technology to compete, and the successful ones grew and gained recognition for good application of technology.
Google, at the core, doesn't sell technology to consumers. They help people find and share information. (Yes, they sell consumer products that have evolved in the technology age, and we often call a phone or a modern speaker "technology.")
Apple is a consumer products company. Microsoft is (by revenue share) an enterprise solutions company. (This includes software, hosting, APIs, etc - all technology.)
As sibling comments have pointed out, from the beginning of their existence, automotive companies took the newest technology (initially motorized transport!) and used it to sell personal transport to consumers. Technology is in almost everything sold (except when it clearly isn't... food, most clothing, some services) or it's used behind the scenes.
Overall, what value do we get from trying to draw a line between technology company, and "not" a technology company? Netflix by itself doesn't really try to sell you technology, and yet they were instrumental in selling smart TVs and streaming boxes.
Do we want to know as prospective employees? Knowing if we are cost centers or profit centers?
> but if I say "Dell is a technology company and Cadbury is not," I don't think people will really object to that unless they're trying to be pedantically clever about it
Such as if you were to ask people, "which is the tech company, Apple or Ford?", most would choose Apple, choosing to call Ford, instead, a "car company".
Is Dell really a tech company though? Does selling computing hardware really count as tech these days since Apple would definitely end up being a tech company under that definition - even with all the other revenue streams it has I think being one of the largest manufacturers of computing hardware would automatically qualify them.
I personally consider "tech companies" to be companies with tech I find interesting to think about - Netflix definitely qualifies under that header, Apple does too owing to producing a huge operating system, Amazon not only has AWS services on offer but they also run a storefront of a staggering scale and were pioneers in how storefronts like that were discovered... Dell - Dell might get grandfathered in as a tech company based on how they were earlyish into the market of web-based computer sales (ala "Dude you're getting a Dell" days) but now a days I assume their tech stack is a pretty ornery customized CMS like thing with a relatively simple order processing system behind it.
I’m confused by how at the very end of your comment you seemingly switch to only considering the tech stack of a company’s online ordering system, which seems to me to be always completely irrelevant to whether a company would be considered a “tech company.”
It's in the context of the first half of the sentence: If "online ordering being interesting" was what made Dell relevant, then the fact that it isn't interesting today is relevant.
Dell takes in a $94 billion dollars in annual revenue across several lines of business and is the 4th biggest “tech” company by revenue after Apple, Microsoft, and Alphabet. Facebook is 5th (“tech”?), then Intel, IBM, HP, Cisco.
Only half of that revenue is from “Dude you’re getting a Dell” - PC (and network / peripheral) sales. DellEMC (mostly enterprise storage or hyperconverged hardware and software) top line is $35 billion or so of that number. The rest is VMware and other software / services.
Simple order processing it is not, it’s like saying a Google is “just search and ads”. Somewhat true, but misses a lot.
Suggesting Dell is just a customized CMS thing is like saying Netflix is just an account registration tool. They're not just reselling equipment designed and made by other companies, they actually make a ton of things as in making actually new technologies. Maybe not things you touch on a day to day basis, but they make tons of things nonetheless.
I like this definition, but I think it breaks down even if you're not trying to be clever. AWS is a tech company. Amazon is not a tech company, it's a retail store. But AWS isn't actually an independent company, it's just a division of Amazon. So we've got a retail store hiding a massive tech company because the retail store is even more massive.
I think this is less a flaw of the definition and more a sign that Amazon should be broken apart and AWS spun off as an independent company.
I generally agree with you here, since it seems like "tech" or "not tech" should be based on services actually provided (ie selling physical books online isn't really tech).
Except, many of these companies have a second, b2b service that they're cultivating as a goal unto itself: customer attribution, identification, aggregation, etc. Companies like goPuff (or Amazon, but Amazon has a hand in everything so is more complicated for this example) have a core "not really tech" service of online ordering of human-delivered goods, but they are actively working to turn all of those engagement/sales/preferences info into a packaged product they can sell to brands and marketing companies, which is at its core, data aggregation and analytics as a service...so "kinda tech"?
To me “tech company” also usually implies that the company has replaced some older thing with a newer technological solution. I think that’s why Netflix intuitively feels like a tech company, even though all the other TV/movie home distribution companies (cable TV, satellite TV, pay per view, even physical media sales/rental, etc.) have always used advanced technology. Netflix is just the company that’s most famously associated with the introduction of the newest mainstream technology for distributing TV and movies: Internet VOD.
Most people wouldn't consider car companies tech companies, but they definitely do R&D and directly sell the technology that results from that inside their cars.
Probably because people don't even have a good definition of "tech". Everything we use is tech. Even books. Some of it is old, some of it is new. But people's definition of tech mostly centers around when they were born.
As a software developer, I mostly care if a company considers their software a competitive advantage. Because they're more likely to treat me well. This is also similar to how I tend to define tech companies: companies that view tech as a competitive advantage. So they aren't just buying stuff off the shelf - they're figuring things out in house, regardless of what they sell.
Everybody I know considers a car company a tech company. I think there exists a strange Silicon Valley definition of tech out there. But maybe my German bias shows. I mean, most of the stuff in SV barely qualifies as tech.
The SV definition of tech leans towards "a user-centric service delivered over the web, with some clever software solutions behind it to handle a lot of data and users".
I thought the definition was more about scaling because of the near zero incremental cost of servicing another customer. But using some sort of tech as the product.
Other industries also exhibit this, like media.
And that is what differs an auto company from a Google. The next car sold still has significant capital investment.
> Everybody I know considers a car company a tech company
I have never heard that. Car companies are mostly manufacturing, that is the major part of their organizations and what drives their decisions. They have big engineering teams, but they have way bigger teams working at factories. If you had a company just creating car designs and selling those to manufacturing companies it would be a tech company, but the current ones aren't.
I don't doubt they were tech companies 80 years ago when things were new and creating new tech was more important. However I don't think that Google or Facebook or Microsoft will be tech companies in 50 years either, its just the nature of having a field being mostly explored and companies being in maintenance mode since there isn't much else they can do.
I suppose it depends on the car company, but a lot of them are logistics companies coupled with assembly plants.
When I visited our customer auto assembly plants the only actual manufacturing going on at was the frame and paint. The rest of the parts were shipped in from other manufacturing facilities.
The auto company did design the parts and send them to contract manufacturers, which is what I worked at. Again, I’m sure this depends on the vertical integration and supply chain relationship of each company, but I think there is less manufacturing than assembly going on.
Cars have been in the small incremental improvement camp for decades which is why they’re not considered tech. Tesla is the outlier because they are pushing a revolutionary change not just incremental ICE improvements and are valued as such on the stock market.
Auto makers could turn into tech companies again but their risk tolerance has to be turned way up.
The history of the word "tech" as an industry sector is that it has been used to refer to computing technology, but cars are certainly a technology more broadly understood.
But we probably should just stick to industry standard jargon. Lockheed and Boeing are definitely technology companies, but not "tech" companies, although that is even further complicated in that they do sell computing hardware and software products, not just airplanes and missiles.
Netflix unambiguously only sells entertainment, though. They use an app and a website as a delivery mechanism, but the app isn't the product.
Also, as much as the emphasis on hacker news is think of employment by Netflix as being an engineer for Netflix, engineers are very far from the highest paid contracts. No engineer is getting the $500 million deals Netflix hands out to Shonda Rhimes and Benioff and Weiss. Netflix itself recognizes content is king here.
I'll just copy and paste my response from before because this comes up often:
there is no real definition of a "tech company" or "tech industry", the word "tech" defines the operating model. This is the dirty little secret VCs don't like to tell you because it means they can call Tesla a tech company (its a car and battery manufacturer) to fetch tech-like valuations or Facebook a tech company (its a media company). Tech operating models typically net high gross margins (i.e. Facebook) which is one of its major defining characteristics.
I therefore posit there is no such thing as a "tech industry", but rather businesses that sit on a spectrum of operating models from:
I think it's still a useful category, but we need to be careful with it, because "tech" is a moving target that only includes what's novel.
As an example, pencils are an excellent technology for writing. (Petroski's "The Pencil" and "The Evolution of Useful Things" are great reads on how much innovation it takes to make something mundane.) But Faber-Castell is definitely not a tech company. Similarly, ~100 years ago, electricity was novel. Fortunes were made starting and investing in electricity and electrical-adjacent companies. Now it's mundane.
Dealing with novel technology requires different skills. Both for the specific technology involved and for wrangling things that are less well understood and keep changing. A good example is the IT department and what they are and aren't responsible for. The breakroom toaster? Nope. The breakroom wifi? Yup. The breakroom TV? Well, that depends.
For me the useful dividing line for "tech company" is where novel, volatile technology is at the heart of their business and vital to their success. That doesn't last. And indeed, the markets have been too generous about pretending certain things are tech companies. Most notably, WeWork, but I'm sure here folks here can name plenty more.
A 'tech company' is that is internally built of software, so it is (theoretically) as easy to evolve as software - which is not that easy, except compared with anything else. So, amazon, stripe, airbnb, uber, reddit, github etc.
Perhaps a bit like when companies started to be built around the new-fangled telephone instead of telegrams and dictated letters. More responsive and free-form.
This does not guarantee a strong competitive opportunity, nor strong execution - but it makes it possible for the benefits of IT to be realized.
Actually, there are several legitimate definitions of 'tech company', this is just a relevant one today that is significant long-term.
> Ultimately any company that makes money is not a tech company because pure technology on its own does not make a business.
Making money is what the _company_ part of "tech company" is about ... right?
It sounds like you want to imagine a world where making tech for non-business purposes is more normalized. I also want to live in that world. But I think perhaps we're so far into a world where tech to be used by an open audience (as vs e.g. secret defense tech) is entirely the province of for-profit enterprises that people have ceased to consider that the players in tech need not be companies.
For me a tech company is one that sales APIs, SDKs or similar products. I was in 3 "tech" startups before that were both b2c and b2b. Their product was perpendicular to their technology (one video-tech 2 Fintech) my current company's product is a set of APIs. It means that the features that we sell ARE the technology, instead of some footnote that buyers send to their nerd department to make sure it checks a box.
Needless to say, the difference on how the tech team is valued is night and day between this last one and all the others.
> The tech has to be good - but, it’s still all about the TV. If Netflix was only showing reruns of Frasier and Ally McBeal no-one would have signed up
I think this is always a bit of a silly argument. If Netflix was showing everything, but the tech was terrible, no one would've signed up. You need both.
The tech isn’t just content delivery. It’s also extracting useful information out of their customers’ habits so they know what to license, what to renew, how much to pay for it, etc.
They're not optimizing for fewer flops, they're optimizing to attain and retain subscribers for the least amount of money. If that means 20 flops for every success, who cares?
I'd disagree considering there's more than a few streaming platforms with sub-par tech. Hulu is quite buggy, as is HBO Max. Criterion Channel is literally just Vimeo and didn't even have working closed captioning until recently.
Hulu is technically quite good and Criterion is a failing service (< 100k subs)--but regardless, technical evaluations need to be made relative to missing would-be subscribers and expectations relative to library size, market size, brand value and marketing budget.
I disagree. The HBOGO app used to have pretty poor tech. It would logout with no reason, forget where I was in the show, sometimes freeze requiring to close and open the app multiple times, have problems with Chromecast. Still, I wanted to see GoT
I mean, I have Paramount, Hulu, and HBO subscriptions, but I'm far more likely to fly the black flag and watch it from my Plex server instead of their apps due to how painful those apps are to use.
If I was a little less honest, it would be easy to skip paying the subscription entirely. I generally use their apps now to find and try new shows, then download them to Plex once I know I like a show (so I'm not burning bandwidth fetching shows I'm not gonna watch).
No, but my tech-illiterate father is now setting up fire TV sticks with Kodi and plugins using Youtube guides for him and my step-siblings.
The whole "are the normies capable of this" argument has turned into an arms-race against Youtube/FB for easy setup guides.
That said, yes, the number of people they'd loose over shitty interfaces is probably kinda small, but I'd argue that as guides, youtube vids, and even all-in-one seedboxes become more available, that population is gonna grow. All it takes is some streamer to lay out the current process.
Yeah I kind of agree, Netflix still seems to be the only streaming service that actually offers a better service than just pirating the content and watching it through Kodi or Plex. There is always some minor or major technical issue or missing feature with every other streaming service I've tried except Netflix.
Once the tech gets good enough to show tiles on all platforms and distribute the content to edges efficiently what "new tech" does Netflix need quarter over quarter?
Netflix wasn't the first service to show TV online. Others didn't catch on because the tech WAS terrible. That's why we all would stream torrents before. Netflix's promise was convenience at a good price and it definitely came down to the tech.
Maybe I am just getting older, but I would pay for a service that simply showed reruns of my favorite shows (including Frasier). That is 99% of what I watch anyway nowadays, just from my NAS.
Especially when you consider before netflix made content and first got its subscribers, it was just showing reruns of shows like Frasier. Cheaper to get through a box set on a netflix subscription than at the video store.
While you can make that argument today, Netflix as a company is 24 years old. It got to its current position not by spending $15B/yr on original content (which it can afford to do now) but purely based on a superior and novel tech experience for its users.
Of course eventually all discussions of this nature devolve into the intricate definition of "tech company", and in the absence of one that is agreed upon, bringing this whole thing up is pointless.
Eh, as a user Netflix original content is a large part of why I still have a subscription.
I used Netflix back when it was mailing me DVDs, and loved the online streaming back in the halcyon days when it seemed like they had everything.
Then came the dark days when content owners began pulling their IP from Netflix and scattering it all over the internet behind a dozen different options that offered them more money or control, and Netflix was a barren wasteland without anything that caught my eye; my queue was a variety of B-tier series that I tried a few episodes of and gave up on.
So I canceled my subscription, for several years. It didn't matter what their UX or uptime was or how smooth their video codecs, they didn't have enough content I wanted to watch.
Then I came back for the original content -- I forget which series first made me sign back up; House of Cards? -- and while I watch licensed content on Netflix from time to time, at least half of what I watch is produced by Netflix.
> It didn't matter what their UX or uptime was or how smooth their video codecs, they didn't have enough content I wanted to watch.
Netflix has developed a novel data system (as evidenced by papermill) that is likely responsible for countless decisions that manifested the content which brought you back. I don't know first hand but I suspect data is integrated into their everyday processes in ways most companies can't even dream of. Does that make them a technology company again?
This is a little bit hyperbole don't you think? I think companies with means these days just invest in this sort of technology because that's what you do in business now. Target is a department store but I wouldn't be surprised to learn they are hiring pure machine learning researchers too and doing remarkable things with data as well, same goes for any large company. 60 years ago you had large companies operating complex switchboards in their offices but you would never call these businesses telephone companies even though they operated their own internal telephone network. That sort of technology was just a tool of the trade, just like data science is now for large companies. I wouldn't call netflix a technology company when literally every large video production company is investing in the same things and trying to hire the same sort of talent, and you wouldn't call MGM or warner brothers a technology company either.
Is Coca-Cola a sugary drinks company, a logistics company, or a technology company producing hardware, software, chemical engineering processes and countless other disciplines to enable international scale methods and logistics employed in delivering various liquids and other goods all over the globe?
It's still a sugary drinks company in my eyes, because all the things you listed are necessary parts to become a sugary drinks company as large as coca cola or pepsi in this day and age.
I was going to say something similar. It's inarguable that they were a tech company, when they pioneered streaming delivery for existing video content. Their tech platform was their primary differentiator to competitors for a number of years.
Whether they are currently a tech company is a bit fuzzier. Certainly they new have content as an additional differentiator, and the margin of their tech advantage has narrowed.
I think we have a large advantage in the CDN space, both in integration and efficiency.
In terms of efficiency, we've been serving at 100Gb/s (mostly TLS encrypted) from single socket servers since 2017, and are moving towards 400Gb/s today. How many other companies can say that?
I'm talking about the push to 400Gb/s at EuroBSDCon online, a week from Sunday..
But that mostly doesn't matter. The consumer doesn't care if their movies are coming from a server handling 10Gb/s or 100 Gb/s or 400 Gb/s. There's cost savings there, but I imagine that content costs dwarf delivery costs at this point.
There is some technology component where the UI, resposiveness, reliability, and so on impact the user experience. But still content is king there. The HBO apps suck and their streaming is less reliable than others but they've got the content I wanna watch so I put up with it.
> purely based on a superior and novel tech experience for its users.
I don't think this is accurate - the main value proposition of Netflix seems to have always been "streaming site with lots of mainstream content, that is also legal". I.e. it's the streaming deals they've made that mattered, not delivery tech or their web player.
No. For the first decade plus of its existence, Netflix was a DVD by mail rental service and there, its technology was a key differentiator. You paid a subscription depending on how many DVDs you wanted to have out at a time, Netflix mailed them to you in red envelopes, and you mailed them back in the same envelope. The ingenious part was that there was a website where you entered in all of the DVDs you wanted and Netflix would mail them to you as they either became available or in order of priority (the original Netflix queue).
Yes, you could be pedantic and call a lot of that logistics, but the lack of physical stores, the website, the queue and rating and recommendation system (the Netflix recommendation algorithm was a huge part of its appeal, even after the streaming stuff, until Netflix got sued for accidentally outing someone with the algo), were all tech.
Netflix has ALWAYS been a hybrid tech and content company. Always. But it started out very much more on disrupting the video store model the same way Amazon disrupted brick and mortar bookstores.
Then all companies are tech companies. They all aim to come up with a product that's better than the last, and they almost never use old tech to do it.
Well, yes. In a certain way, everything is tech. Tech != computers/engineers/algorithms/robots/HAl/whatever.
But even in the popular understanding of what a tech company is, Netflix more than many others DOES have historical and current tech bonafides. 25 years ago during dot com mania, there wasn’t a lot of hand-wringing about whether WebVan or Pets.com or Amazon or whatever were tech companies. It was accepted that e-commerce WAS tech, even if it was different than DEC/Compaq/HP or Sun or Microsoft or Apple or whatever.
And Netflix operated from a website, used technology for its logistic and delivery system (much like other e-commerce systems)and had a recommendation algorithm (that they had a contest to improve, because they saw that good recommendations reduced churn) and a focus on UX to keep the product good.
It took them more than a decade, but the goal of delivering video via the Internet was always there. Roku, which in its original incarnation was simply a Netflix streaming box, was originally ideated and developed at Netflix before the company decided it didn’t want to be in the hardware business and so the head of the project and the engineers left to make Roku. Netflix has done as much work as any single company except perhaps YouTube to optimize and pioneer how to effectively serve large swaths of video to users across the globe.
The problem with Ben Evans’ piece is that he misunderstands that Netflix has always been a tech and a content company. Even when it was a rental company with more tech and no original content, the recommendation algorithm and the dedication to buyers and curators who would make the decisions about what DVDs were purchased (eventually customer signals played into this too) always had a very strong content focus in the product.
That’s the reason Netflix works. It was the first media company to really innately understand both tech and content. Disney and HBO (WarnerMedia, whatever) have great tech stacks too (especially Disney), but Netflix was the first and is still the most successful.
My local library has had the same service for about equally long. The only difference is that instead of ordering them to my house, I order them to the nearest branch and then I walk in and pick it up whenever I feel like it. Then I drop them off a couple weeks later. No need to mess with envelopes and shipping. And it's free!
While I don't disagree that this experience exists in many places, the reality is nowhere near as convenient as you describe it. The waitlist for any movie I want to see is astronomical unless it's a decade old so by the time I get it, I might not be interested anymore. Netflix somehow had the logistics worked out that everyone could get most new movies pretty close to release which I think is why they took off in popularity.
Also, the Netflix shipping/return mechanism is arguably more convenient than even driving to the library. The envelopes were prepaid and were built in such a way that opening it uses one part of the packaging, which exposed a tape seam to seal it for return. Chuck that in any mailbox and you're good to go. Better than driving 15 minutes across town to the library to return a movie in the drop-off bin and hope it doesn't get lost and I get charged for it, forcing me to go inside so I know it was returned properly...
I want the local library version to get better, but right now it still has a ways to go in my city.
Perhaps Netflix has shifted. In the beginning, I think you could have made a good argument that technology was their moat, but I don't think you can say so today.
Today, their best attempt at a moat is content, and it's a poor one at best since they can only make so much original content and it's not as if they can do so in a way that is inaccessible to other services.
> but purely based on a superior and novel tech experience for its users.
I mean they were the pioneers in offering tv and movies via streaming. The tech is really not that dramatic.
You can think of streaming tech in three parts: video quality, recommendations and UI.
Arguably video quality is the most important, but other platforms have already offer similar/better quality (albeit a lil more data).
Their recommendations and UI are better than others but I honestly don't care about these two as they are still not good enough for me to discover content I would want to watch, for that I still have to go to reddit/curated articles.
So I would say Netflix's contribution was more in pioneering tv streaming as opposed to tech. They are now competing mostly in terms of their originals, so I would label them more like Disney/HBO rather than tech.
I think "tech company" is a near-useless label, anyway. I struggle to think of any company that isn't, or at least shouldn't be, a tech company. Everyone uses technology to provide their product or service, even if they are rudimentary ones. There are those companies that are pushing the boundaries of what was previously possible, sure, and if that's what people agree is the definition of "tech company" (high innovation), then surely Netflix counts. No one watched much TV on computers or phones before them.
There are multiple OTT content providers in India, many with "popular" content, but their tech is bad ( to be accurate), so is the experience of watching shows on them.
Look at it from that lens, and Netflix is a tech company.
> Coming back to TV, there’s an irony here in the fact that the tech industry has spent decades wanting to get into the living room, get into TV, break up the cable bundle and move TV from scheduled linear to on-demand, and yet now that it’s happening, it’s happening in the TV industry, not the tech industry.
I don’t see the irony. This seems to be a circular definition of “TV industry”. The technological breakthroughs (cable, satellite, streaming, mobile) that completely change TV don’t count as “tech industry”. Silicon Valley startups Netflix and Apple somehow don’t count, neither does Amazon, and YouTube doesn’t even get mentioned.
I also have an issue with the implied definition of “commodity”. I think a commodity needs fungibility and availability. So storage is now a commodity, but large scale streaming is not. You can’t order a Netflix scale infrastructure on the market.
> The box was good, the UI was good, the truck-rolls were good, and the customer service and experience were good.
What UI? Back when Sky launched the box would show you the channel number you where tuned to via LEDS over the channel selection buttons and/or via a simple OSD like you would get on any other TV with a OSD displaying channel numbers.
The best UI you got was went something wasn't "working" (be it because you didn't have the auth or because something went wrong) and the OSD told you it couldn't decrypt a channel / to insert your viewing card.
It wasn't until the launch of digital I would say it gained an UI.
Granted the truck rolls and the customer service was decent from what I recall. I don't recall any major issues. (and the UI on the digital boxes wasn't bad when it came out and have been added to since, no idea what the Q boxes are like as I cord cut a fair few years ago.).
I think it's generally understood that, in the 21st century, a "tech company" is a company that uses tech as the principal competitive advantage to replace traditional "non-21st-century-tech" incumbents.
Obviously, Netflix used streaming, collaborative filtering recommendations, and a massive CDN to replace cable TV subscriptions.
If that's not a perfect example of a tech company, I don't know what is.
Yes Netflix needed a good content library too, but that's never been its primary differentiator. NBC and HBO have been producing good content for many decades now. That's table stakes.
There's another "level" of tech companies, you could argue -- companies that supply tech rather than just use it as a competitive advantage -- e.g. Microsoft, Apple, MongoDB, Dropbox.
But today we tend to label those "software" or "hardware" companies specifically (or a combination). Perhaps in the 1980's those were the only "tech" companies. But at least ever since the dot-com era, "tech company" has meant companies that use tech as the principal competitive advantage (as opposed to merely increasing internal efficiency).
apple may not be a pure tech company, they re a gadget company, but they have developed a lot of technologies that they can patent, a lot of UX things, and it seems they have evolved many of the preexisting ones. I don't really know what netflix does, do they develop things like video codecs, load balancing tech or recommendation algorithms?
So you and the author have exactly opposite perceptions of what is “table stakes” (tech or content) and where the strategic advantage in the streaming business lies…
Perhaps one missing piece is that there is a first-mover advantage to being the tech disruptor, but in many cases the tech quickly becomes “table stakes” and the strategy goes back to where it was.
Exactly right. And I, as a consumer, would consider content as the primary driver. An efficient delivery mechanism is already (or soon will be) commoditized. Bad content delivered efficiently won't drive profits.
Netflix figured out data-driven streaming better than anyone. That's its competitive advantage, full stop. It purchases content based on unparalleled data analysis, i.e. big-data tech. They often don't even order pilots (previously unheard of), they're so confident in their statistics.
A useful contrast is with HBO. Yes HBO has a streaming service and app... but its competitive advantage is in prestige content people will pay $$$ for. Somehow HBO's management team is incredibly good at nurturing content in an artistic critically-acclaimed way, rather than tech-data-driven way.
For Netflix, tech is the primary differentiator and the content is table stakes. While for HBO it's reversed. It all depends on how a given company is choosing to compete in the same market.
>Somehow HBO's management team is incredibly good at nurturing content in an artistic critically-acclaimed way, rather than tech-data-driven way.
It was good. As far as I understand, ATT got rid of most of the bosses responsible for nurturing that quality over quantity atmosphere and they are also now pumping out garbage.
A few months ago, I opened up the HBO Max app (which I only have access to due to it being bundled into my mobile phone plan), and this is the show that was being advertised:
...you mean shows like the critically-acclaimed Mare of Easttown and Hacks and The White Lotus, all this year?
Nobody ever said HBO was exclusively prestige content. There isn't enough to fill multiple channels 24/7. But it's still the main factor that drives subscriptions.
It was exclusively quality content (or a higher probability of it). That is why people used to pay $15 per month just for HBO. HBO's curation was its value. If I have to research whether or not an HBO show is good or not, then the HBO branding is worthless.
Thanks for the recommendations though! They look interesting.
>They often don't even order pilots (previously unheard of), they're so confident in their statistics.
And a lot of their Netflix-branded shows are quite mediocre. I'd say they're not so much confident of their statistics about each individual show as they are about being able to promote their shows and get them viewed anyhow.
And on the average, it works out for them without the messy bits in the middle with ordering a pilot and having to somehow assess the quality of that pilot in regards to a full show.
The trouble with this definition is that as it defines tech as an advantage, it intrinsically depends on what your competitors are doing.
Is Netflix still a tech company when Disney (incumbent) now offers similar tech? Does Netflix still have tech as its principal competitive advantage, or are subscribers now choosing who they subscribe to based on content?
If the latter, then Netflix is now a media company, and whatever tech superiority they still have is about as relevant as Betamax's tech superiority over VHS.
> Obviously, Netflix used streaming, collaborative filtering recommendations, and a massive CDN to replace cable TV subscriptions.
Then Disney, HBO, and CBS are now tech companies.
To stretch your analogy, you might even argue that Target and Walmart are tech companies too. Or UPS, DHL, and FedEx. They do massive scale logistics using computers.
I would go by a different definition for tech. Are engineers the principal innovators and expense driving the company forward? Are automation, growth, measurement, iteration, and hard problems a chief mindset? That's what tech is to me. You could even meet those definitions without being an internet company. SpaceX, Tesla...
> Yes Netflix needed a good content library too, but that's never been its primary differentiator. NBC and HBO have been producing good content for many decades now. That's table stakes.
It's pretty much the only differentiator, and what people mean when they say "content is king." Very few companies can compete with Netflix on fidelity and technical performance. Yet Netflix is second fiddle to industry giants that contracted out their streaming platform development, because ultimately consumers care more about what they're watching than how they watch it.
I've been in video tech for a long time, and you glossed over the part where Netflix does tech company things. They invented VMAF and per-title encoding. I've seen countless video tech talks and Netflix consistently brings innovation to the table.
Ah, nothing like a clickbaity title to nerd-snipe us the morning after a holiday!
> Like Sky, Netflix has used technology as a crowbar to build a new TV business. Everything about how it executed that technology has to be good. The apps are good, the streaming and compression are good, the UI is good, the recommendation engine is good, and the customer service and experience are good. Unlike American cable subscribers, Netflix subscribers are generally pretty happy with the tech. The tech has to be good - but, it’s still all about the TV... It used tech as a crowbar, and the crowbar had to be good, but it’s actually a TV company.
By this logic, Google is less a tech company than an advertising firm that used tech as a crowbar! Microsoft is an office supplies manufacturer! Which seems absurdly reductive.
In my mind, if you're scaling customized services for individual users far beyond what a team of top-tier customer service professionals could do (or you're cyborg-izing those service professionals!), you're a tech company. Plain and simple. And Netflix fits this bill because part of its approach to content creation is that programming choices should be driven by quantitative insights about individual users - it's just a very, very long iteration cycle on the optimization algorithm.
In 1997, Hastings and Randolph mailed a DVD to see if it would be delivered without damage. Netflix was created because a new market (home delivery of movies) was created by an emerging technology.
10 years later, Netflix kick started the streaming revolution. In 2008, Netflix licensed the Starz catalogue of 2,500 titles.
In a podcast episode, Ben Thompson said Netflix was his favorite company to write about because they have successfully transitioned their business model multiple times to take advantage of technological shifts.
The always had streaming in mind though but the infrastructure for it did not exist for mass adoption. They used DVD and USPS to gain footprint get off the ground. This enabled Netflix to wait it until the market was ready for their big tech-play. c.f. SV failures like WebTV and General Magic who were ahead of their time but the market/infrastructure didn't exist.
This is attributing much more coherence to Netflix's strategy than could be reasonably assumed.
Netflix is still trying to figure out what it is. I think their growth post-DVD was based on the assumption that they would be the clearinghouse for all video content; with Hulu and the further balkanization of the video space, it was clear that this was not going to happen; that Netflix was destined to be one provider among many, and that their sources of content would start to dry up as other companies decided that the streaming and application and appliances were commodity technology that they could just brand in-house.
The quality of the UI of Netflix is terrible, but everyone else is so much worse that for the moment they stand out. And they never managed to get on the bandwagon of selling add-on packages like Hulu and Amazon did (although both of those products have such abysmal UX that you gain very little over using the respective native apps).
So now they're continuing to play up the original content game, which appears to be where the industry in general is headed, because the Paramount Consent Decree is so dead that it can't even hear our prayers.
They are a tech company insofar as they have invested heavily in the tech and as a result have the most reliable and usable platform (and the most research into recommendations), but the gap between Netflix and commodity streaming is narrow enough now that their edge in the technology space is gone. So they're basically a studio/theater at this point, like everyone else in the space. The only difference between Disney and Netflix is that Netflix doesn't have a theme park (yet!).
This was only part of your comment, but I’m very happy with my Apple TV purchase (especially now with the “fixed” remote). The hardware has always been sufficiently fast which enables app devs to present the best version of their UIs. Though this isn’t a silver bullet (see the Prime Video app), the same APIs many devs are used to on iOS do enable a delightful experience (insofar as delightful = objectively better than the experiences on alternative hardware).
> based on the assumption that they would be the clearinghouse for all video content
Unless they pivoted at lightning speed, I don't think this is true. When I saw the online subscriptions start for Netflix, I, some random person on the street, observed that the moment a white-box streaming service is created, all of the content-owners will have zero incentive to put their content on Netflix.
If I could think of this, then so could Netflix, and sure enough we started seeing netflix buying and producing content of their own pretty quickly.
Yup. Netflix doesn’t sell tech, it sells subscriptions to scripted drama. It uses tech to expedite its business, like everyone else.
Yes, they invent a little more technology than your typical small business spreadsheet. But tech is a commodity for them because the only strategy for tech is that “it has to be good”.
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[ 5.3 ms ] story [ 298 ms ] threadthe only reason additional industry specific questions exist is because they have so many simultaneous users that theyve reached theoretical maximums on their near-free resources
when other industries reach the same place, if at all ever possible, then we can split hairs over this distinction
So tech is bit murky, but Netflix with Google and Facebook should clearly qualify.
It isn't that Tesla has no MBAs on staff or the GM has no engineers on staff. But a culture that leverages engineering culture can iterate and reinvent itself and include new technologies faster than one who is focused on management metrics.
I'm not saying that MBAs are bad, there are plenty of companies that went way to heavy on hiring engineers and went bankrupt before their business plan was viable.
How many "non-tech companies" are non-tech companies simply because they're too disfunctional to use technology effectively? Think of your bank with its shitty password rules, only offering 2FA using SMS, and no useful APIs; that's a non-tech company. They either aren't aware of their lackluster technology, or are unable to organize themselves well enough to improve it.
Is the IT/Software Dev a profit center or a cost center, easy as that.
For a modern information-centric company, what does that mean? Get the technology right. Pay some smart people to get your internals ship-shape and reproducible, for example.
I'm not saying banks are great at tech, because on any individual metric it would be really hard to find an example of where they lead, but they (and other highly regulated industries) have a lot more to solve for along the way.
What is Microsoft then? What is Apple?
Google I can accept as some kind of service provider and advertising company that uses a lot of tech. Amazon as well.
So Intel, TSMC, Nvidia are not tech companies?
There is an incredible amount of advanced technology being created and used by more "traditional" industries like manufacturing, aerospace, or animation.
Why should Facebook be considered a technology company but not Pixar, Ratheon, General Dynamics, Corning or TSMC? It makes zero sense and relies on a very self-serving definition of "technology".
This hits the nail on the head. If you dig down into it, this almost always aligns with the companies people describe as 'tech companies'.
Maybe it's more to do with the strategy of the company.
For the vast majority of companies technology is tool, not the product, but whether you call them a "tech company" seems a silly game. I'd think pretty much all companies are "tech companies" and the better you are at using those tools can provide a competitive advantage.
"X makes money, therefore they are not a tech company" seems rather oversimplified in the same way "X is a tech company" is oversimplified. Actually, it seems oversimplified to the point of maybe not being so useful.
I think the way most people would define "tech company," if they were pressed to offer a definition, is that a tech company is one that derives the bulk of their revenue from selling technological goods and services, rather than using technology as the means to sell other goods and services. There's no way to keep that definition from being somewhat fuzzy, but if I say "Dell is a technology company and Cadbury is not," I don't think people will really object to that unless they're trying to be pedantically clever about it: Cadbury may use technology in all sorts of clever ways to manufacture chocolates and get them to retail shelves, but they're selling you chocolates.
There are obviously companies that complicate this by having multiple divisions with different kinds of revenue streams -- Amazon and Apple both come to mind immediately -- but Netflix really isn't one of them. What they do requires a lot of focus on their technology, and from the perspective of someone perusing their job listings it's very easy to think of them as "a tech company." But what they're ultimately selling is access to their content.
There are companies that effectively use technology to outcompete (or "disrupt") incumbent companies in a market. Amazon in retail, Netflix in media, Craigslist for classifieds, Uber for taxis, etc.
It seems as if many existing companies, like Cadbury's perhaps, aren't able to effectively re-work their business models with the new possibilities available via tech. Thus they're "non-tech" companies even if they do make some modest use of technology, but ultimately their business model predates tech.
"Tech" companies in this space are the ones creating or adopting brand new business models in an existing space enabled by technology. This is the "software eating the world" part of the tech market.
So Netflix is using a tech strategy, but it won't forever be a tech company.
As the particular technology a company deploys becomes widespread, then everyone will deploy it and it will no longer be a tech company.
To put it another way: Netflix was not a tech company when it launched and was mailing DVDs, it became a tech company when it started its streaming service, and as other companies also launch streaming services, it won't be a technology company in the future.
Across many industries, especially in the past several decades, companies have used (modern) technology to compete, and the successful ones grew and gained recognition for good application of technology.
Google, at the core, doesn't sell technology to consumers. They help people find and share information. (Yes, they sell consumer products that have evolved in the technology age, and we often call a phone or a modern speaker "technology.")
Apple is a consumer products company. Microsoft is (by revenue share) an enterprise solutions company. (This includes software, hosting, APIs, etc - all technology.)
As sibling comments have pointed out, from the beginning of their existence, automotive companies took the newest technology (initially motorized transport!) and used it to sell personal transport to consumers. Technology is in almost everything sold (except when it clearly isn't... food, most clothing, some services) or it's used behind the scenes.
Overall, what value do we get from trying to draw a line between technology company, and "not" a technology company? Netflix by itself doesn't really try to sell you technology, and yet they were instrumental in selling smart TVs and streaming boxes.
Do we want to know as prospective employees? Knowing if we are cost centers or profit centers?
Such as if you were to ask people, "which is the tech company, Apple or Ford?", most would choose Apple, choosing to call Ford, instead, a "car company".
I personally consider "tech companies" to be companies with tech I find interesting to think about - Netflix definitely qualifies under that header, Apple does too owing to producing a huge operating system, Amazon not only has AWS services on offer but they also run a storefront of a staggering scale and were pioneers in how storefronts like that were discovered... Dell - Dell might get grandfathered in as a tech company based on how they were earlyish into the market of web-based computer sales (ala "Dude you're getting a Dell" days) but now a days I assume their tech stack is a pretty ornery customized CMS like thing with a relatively simple order processing system behind it.
Only half of that revenue is from “Dude you’re getting a Dell” - PC (and network / peripheral) sales. DellEMC (mostly enterprise storage or hyperconverged hardware and software) top line is $35 billion or so of that number. The rest is VMware and other software / services.
Simple order processing it is not, it’s like saying a Google is “just search and ads”. Somewhat true, but misses a lot.
I think this is less a flaw of the definition and more a sign that Amazon should be broken apart and AWS spun off as an independent company.
Except, many of these companies have a second, b2b service that they're cultivating as a goal unto itself: customer attribution, identification, aggregation, etc. Companies like goPuff (or Amazon, but Amazon has a hand in everything so is more complicated for this example) have a core "not really tech" service of online ordering of human-delivered goods, but they are actively working to turn all of those engagement/sales/preferences info into a packaged product they can sell to brands and marketing companies, which is at its core, data aggregation and analytics as a service...so "kinda tech"?
Probably because people don't even have a good definition of "tech". Everything we use is tech. Even books. Some of it is old, some of it is new. But people's definition of tech mostly centers around when they were born.
As a software developer, I mostly care if a company considers their software a competitive advantage. Because they're more likely to treat me well. This is also similar to how I tend to define tech companies: companies that view tech as a competitive advantage. So they aren't just buying stuff off the shelf - they're figuring things out in house, regardless of what they sell.
Other industries also exhibit this, like media.
And that is what differs an auto company from a Google. The next car sold still has significant capital investment.
I have never heard that. Car companies are mostly manufacturing, that is the major part of their organizations and what drives their decisions. They have big engineering teams, but they have way bigger teams working at factories. If you had a company just creating car designs and selling those to manufacturing companies it would be a tech company, but the current ones aren't.
When I visited our customer auto assembly plants the only actual manufacturing going on at was the frame and paint. The rest of the parts were shipped in from other manufacturing facilities.
The auto company did design the parts and send them to contract manufacturers, which is what I worked at. Again, I’m sure this depends on the vertical integration and supply chain relationship of each company, but I think there is less manufacturing than assembly going on.
Auto makers could turn into tech companies again but their risk tolerance has to be turned way up.
But we probably should just stick to industry standard jargon. Lockheed and Boeing are definitely technology companies, but not "tech" companies, although that is even further complicated in that they do sell computing hardware and software products, not just airplanes and missiles.
Netflix unambiguously only sells entertainment, though. They use an app and a website as a delivery mechanism, but the app isn't the product.
Also, as much as the emphasis on hacker news is think of employment by Netflix as being an engineer for Netflix, engineers are very far from the highest paid contracts. No engineer is getting the $500 million deals Netflix hands out to Shonda Rhimes and Benioff and Weiss. Netflix itself recognizes content is king here.
How would you define pre-AWS Amazon? It doesn't seem to meet this definition, yet I think most would still consider them to have been a tech company
there is no real definition of a "tech company" or "tech industry", the word "tech" defines the operating model. This is the dirty little secret VCs don't like to tell you because it means they can call Tesla a tech company (its a car and battery manufacturer) to fetch tech-like valuations or Facebook a tech company (its a media company). Tech operating models typically net high gross margins (i.e. Facebook) which is one of its major defining characteristics.
I therefore posit there is no such thing as a "tech industry", but rather businesses that sit on a spectrum of operating models from:
- Back office IT supported
- Tech enabled
- Tech Led
https://news.ycombinator.com/item?id=27693634
As an example, pencils are an excellent technology for writing. (Petroski's "The Pencil" and "The Evolution of Useful Things" are great reads on how much innovation it takes to make something mundane.) But Faber-Castell is definitely not a tech company. Similarly, ~100 years ago, electricity was novel. Fortunes were made starting and investing in electricity and electrical-adjacent companies. Now it's mundane.
Dealing with novel technology requires different skills. Both for the specific technology involved and for wrangling things that are less well understood and keep changing. A good example is the IT department and what they are and aren't responsible for. The breakroom toaster? Nope. The breakroom wifi? Yup. The breakroom TV? Well, that depends.
For me the useful dividing line for "tech company" is where novel, volatile technology is at the heart of their business and vital to their success. That doesn't last. And indeed, the markets have been too generous about pretending certain things are tech companies. Most notably, WeWork, but I'm sure here folks here can name plenty more.
This does not guarantee a strong competitive opportunity, nor strong execution - but it makes it possible for the benefits of IT to be realized.
Actually, there are several legitimate definitions of 'tech company', this is just a relevant one today that is significant long-term.
Aside from weird blockchain entities, this doesn't exist. Companies may use software, but they are made of people.
Making money is what the _company_ part of "tech company" is about ... right?
It sounds like you want to imagine a world where making tech for non-business purposes is more normalized. I also want to live in that world. But I think perhaps we're so far into a world where tech to be used by an open audience (as vs e.g. secret defense tech) is entirely the province of for-profit enterprises that people have ceased to consider that the players in tech need not be companies.
Needless to say, the difference on how the tech team is valued is night and day between this last one and all the others.
I think this is always a bit of a silly argument. If Netflix was showing everything, but the tech was terrible, no one would've signed up. You need both.
If I was a little less honest, it would be easy to skip paying the subscription entirely. I generally use their apps now to find and try new shows, then download them to Plex once I know I like a show (so I'm not burning bandwidth fetching shows I'm not gonna watch).
The whole "are the normies capable of this" argument has turned into an arms-race against Youtube/FB for easy setup guides.
That said, yes, the number of people they'd loose over shitty interfaces is probably kinda small, but I'd argue that as guides, youtube vids, and even all-in-one seedboxes become more available, that population is gonna grow. All it takes is some streamer to lay out the current process.
I am willing to bet that this had zero impact on cable subscriptions.
Of course eventually all discussions of this nature devolve into the intricate definition of "tech company", and in the absence of one that is agreed upon, bringing this whole thing up is pointless.
I used Netflix back when it was mailing me DVDs, and loved the online streaming back in the halcyon days when it seemed like they had everything.
Then came the dark days when content owners began pulling their IP from Netflix and scattering it all over the internet behind a dozen different options that offered them more money or control, and Netflix was a barren wasteland without anything that caught my eye; my queue was a variety of B-tier series that I tried a few episodes of and gave up on.
So I canceled my subscription, for several years. It didn't matter what their UX or uptime was or how smooth their video codecs, they didn't have enough content I wanted to watch.
Then I came back for the original content -- I forget which series first made me sign back up; House of Cards? -- and while I watch licensed content on Netflix from time to time, at least half of what I watch is produced by Netflix.
Netflix has developed a novel data system (as evidenced by papermill) that is likely responsible for countless decisions that manifested the content which brought you back. I don't know first hand but I suspect data is integrated into their everyday processes in ways most companies can't even dream of. Does that make them a technology company again?
- https://studios.disneyresearch.com/publications/
- https://la.disneyresearch.com/publication/
Even outside of movies they have significant care to innovate and push the boundaries, for instance in theme park animatronics or toys in general.
Whether they are currently a tech company is a bit fuzzier. Certainly they new have content as an additional differentiator, and the margin of their tech advantage has narrowed.
In terms of efficiency, we've been serving at 100Gb/s (mostly TLS encrypted) from single socket servers since 2017, and are moving towards 400Gb/s today. How many other companies can say that?
I'm talking about the push to 400Gb/s at EuroBSDCon online, a week from Sunday..
There is some technology component where the UI, resposiveness, reliability, and so on impact the user experience. But still content is king there. The HBO apps suck and their streaming is less reliable than others but they've got the content I wanna watch so I put up with it.
I don't think this is accurate - the main value proposition of Netflix seems to have always been "streaming site with lots of mainstream content, that is also legal". I.e. it's the streaming deals they've made that mattered, not delivery tech or their web player.
Yes, you could be pedantic and call a lot of that logistics, but the lack of physical stores, the website, the queue and rating and recommendation system (the Netflix recommendation algorithm was a huge part of its appeal, even after the streaming stuff, until Netflix got sued for accidentally outing someone with the algo), were all tech.
Netflix has ALWAYS been a hybrid tech and content company. Always. But it started out very much more on disrupting the video store model the same way Amazon disrupted brick and mortar bookstores.
But even in the popular understanding of what a tech company is, Netflix more than many others DOES have historical and current tech bonafides. 25 years ago during dot com mania, there wasn’t a lot of hand-wringing about whether WebVan or Pets.com or Amazon or whatever were tech companies. It was accepted that e-commerce WAS tech, even if it was different than DEC/Compaq/HP or Sun or Microsoft or Apple or whatever.
And Netflix operated from a website, used technology for its logistic and delivery system (much like other e-commerce systems)and had a recommendation algorithm (that they had a contest to improve, because they saw that good recommendations reduced churn) and a focus on UX to keep the product good.
It took them more than a decade, but the goal of delivering video via the Internet was always there. Roku, which in its original incarnation was simply a Netflix streaming box, was originally ideated and developed at Netflix before the company decided it didn’t want to be in the hardware business and so the head of the project and the engineers left to make Roku. Netflix has done as much work as any single company except perhaps YouTube to optimize and pioneer how to effectively serve large swaths of video to users across the globe.
The problem with Ben Evans’ piece is that he misunderstands that Netflix has always been a tech and a content company. Even when it was a rental company with more tech and no original content, the recommendation algorithm and the dedication to buyers and curators who would make the decisions about what DVDs were purchased (eventually customer signals played into this too) always had a very strong content focus in the product.
That’s the reason Netflix works. It was the first media company to really innately understand both tech and content. Disney and HBO (WarnerMedia, whatever) have great tech stacks too (especially Disney), but Netflix was the first and is still the most successful.
Also, the Netflix shipping/return mechanism is arguably more convenient than even driving to the library. The envelopes were prepaid and were built in such a way that opening it uses one part of the packaging, which exposed a tape seam to seal it for return. Chuck that in any mailbox and you're good to go. Better than driving 15 minutes across town to the library to return a movie in the drop-off bin and hope it doesn't get lost and I get charged for it, forcing me to go inside so I know it was returned properly...
I want the local library version to get better, but right now it still has a ways to go in my city.
That's the problem with software. It solves problems so well they stay solved, and only constructed problems such as IP ownership remain.
Today, their best attempt at a moat is content, and it's a poor one at best since they can only make so much original content and it's not as if they can do so in a way that is inaccessible to other services.
I mean they were the pioneers in offering tv and movies via streaming. The tech is really not that dramatic.
You can think of streaming tech in three parts: video quality, recommendations and UI.
Arguably video quality is the most important, but other platforms have already offer similar/better quality (albeit a lil more data).
Their recommendations and UI are better than others but I honestly don't care about these two as they are still not good enough for me to discover content I would want to watch, for that I still have to go to reddit/curated articles.
So I would say Netflix's contribution was more in pioneering tv streaming as opposed to tech. They are now competing mostly in terms of their originals, so I would label them more like Disney/HBO rather than tech.
Downvoters: So Nvidia, Intel, AMD, TSMC are not technology companies?
Look at it from that lens, and Netflix is a tech company.
I don’t see the irony. This seems to be a circular definition of “TV industry”. The technological breakthroughs (cable, satellite, streaming, mobile) that completely change TV don’t count as “tech industry”. Silicon Valley startups Netflix and Apple somehow don’t count, neither does Amazon, and YouTube doesn’t even get mentioned.
I also have an issue with the implied definition of “commodity”. I think a commodity needs fungibility and availability. So storage is now a commodity, but large scale streaming is not. You can’t order a Netflix scale infrastructure on the market.
What UI? Back when Sky launched the box would show you the channel number you where tuned to via LEDS over the channel selection buttons and/or via a simple OSD like you would get on any other TV with a OSD displaying channel numbers.
The best UI you got was went something wasn't "working" (be it because you didn't have the auth or because something went wrong) and the OSD told you it couldn't decrypt a channel / to insert your viewing card.
It wasn't until the launch of digital I would say it gained an UI.
Granted the truck rolls and the customer service was decent from what I recall. I don't recall any major issues. (and the UI on the digital boxes wasn't bad when it came out and have been added to since, no idea what the Q boxes are like as I cord cut a fair few years ago.).
I think it's generally understood that, in the 21st century, a "tech company" is a company that uses tech as the principal competitive advantage to replace traditional "non-21st-century-tech" incumbents.
Obviously, Netflix used streaming, collaborative filtering recommendations, and a massive CDN to replace cable TV subscriptions.
If that's not a perfect example of a tech company, I don't know what is.
Yes Netflix needed a good content library too, but that's never been its primary differentiator. NBC and HBO have been producing good content for many decades now. That's table stakes.
There's another "level" of tech companies, you could argue -- companies that supply tech rather than just use it as a competitive advantage -- e.g. Microsoft, Apple, MongoDB, Dropbox.
But today we tend to label those "software" or "hardware" companies specifically (or a combination). Perhaps in the 1980's those were the only "tech" companies. But at least ever since the dot-com era, "tech company" has meant companies that use tech as the principal competitive advantage (as opposed to merely increasing internal efficiency).
Did they develop any of these technologies?
Perhaps one missing piece is that there is a first-mover advantage to being the tech disruptor, but in many cases the tech quickly becomes “table stakes” and the strategy goes back to where it was.
A useful contrast is with HBO. Yes HBO has a streaming service and app... but its competitive advantage is in prestige content people will pay $$$ for. Somehow HBO's management team is incredibly good at nurturing content in an artistic critically-acclaimed way, rather than tech-data-driven way.
For Netflix, tech is the primary differentiator and the content is table stakes. While for HBO it's reversed. It all depends on how a given company is choosing to compete in the same market.
It was good. As far as I understand, ATT got rid of most of the bosses responsible for nurturing that quality over quantity atmosphere and they are also now pumping out garbage.
A few months ago, I opened up the HBO Max app (which I only have access to due to it being bundled into my mobile phone plan), and this is the show that was being advertised:
https://www.hbomax.com/series/urn:hbo:series:GYN4ywAXUS1OLNg...
...you mean shows like the critically-acclaimed Mare of Easttown and Hacks and The White Lotus, all this year?
Nobody ever said HBO was exclusively prestige content. There isn't enough to fill multiple channels 24/7. But it's still the main factor that drives subscriptions.
Thanks for the recommendations though! They look interesting.
And a lot of their Netflix-branded shows are quite mediocre. I'd say they're not so much confident of their statistics about each individual show as they are about being able to promote their shows and get them viewed anyhow.
And on the average, it works out for them without the messy bits in the middle with ordering a pilot and having to somehow assess the quality of that pilot in regards to a full show.
Is Netflix still a tech company when Disney (incumbent) now offers similar tech? Does Netflix still have tech as its principal competitive advantage, or are subscribers now choosing who they subscribe to based on content?
If the latter, then Netflix is now a media company, and whatever tech superiority they still have is about as relevant as Betamax's tech superiority over VHS.
Then Disney, HBO, and CBS are now tech companies.
To stretch your analogy, you might even argue that Target and Walmart are tech companies too. Or UPS, DHL, and FedEx. They do massive scale logistics using computers.
I would go by a different definition for tech. Are engineers the principal innovators and expense driving the company forward? Are automation, growth, measurement, iteration, and hard problems a chief mindset? That's what tech is to me. You could even meet those definitions without being an internet company. SpaceX, Tesla...
It's pretty much the only differentiator, and what people mean when they say "content is king." Very few companies can compete with Netflix on fidelity and technical performance. Yet Netflix is second fiddle to industry giants that contracted out their streaming platform development, because ultimately consumers care more about what they're watching than how they watch it.
I've been in video tech for a long time, and you glossed over the part where Netflix does tech company things. They invented VMAF and per-title encoding. I've seen countless video tech talks and Netflix consistently brings innovation to the table.
> Like Sky, Netflix has used technology as a crowbar to build a new TV business. Everything about how it executed that technology has to be good. The apps are good, the streaming and compression are good, the UI is good, the recommendation engine is good, and the customer service and experience are good. Unlike American cable subscribers, Netflix subscribers are generally pretty happy with the tech. The tech has to be good - but, it’s still all about the TV... It used tech as a crowbar, and the crowbar had to be good, but it’s actually a TV company.
By this logic, Google is less a tech company than an advertising firm that used tech as a crowbar! Microsoft is an office supplies manufacturer! Which seems absurdly reductive.
In my mind, if you're scaling customized services for individual users far beyond what a team of top-tier customer service professionals could do (or you're cyborg-izing those service professionals!), you're a tech company. Plain and simple. And Netflix fits this bill because part of its approach to content creation is that programming choices should be driven by quantitative insights about individual users - it's just a very, very long iteration cycle on the optimization algorithm.
10 years later, Netflix kick started the streaming revolution. In 2008, Netflix licensed the Starz catalogue of 2,500 titles.
In a podcast episode, Ben Thompson said Netflix was his favorite company to write about because they have successfully transitioned their business model multiple times to take advantage of technological shifts.
https://podcasts.apple.com/us/podcast/ben-thompson-platforms...
Netflix is still trying to figure out what it is. I think their growth post-DVD was based on the assumption that they would be the clearinghouse for all video content; with Hulu and the further balkanization of the video space, it was clear that this was not going to happen; that Netflix was destined to be one provider among many, and that their sources of content would start to dry up as other companies decided that the streaming and application and appliances were commodity technology that they could just brand in-house.
The quality of the UI of Netflix is terrible, but everyone else is so much worse that for the moment they stand out. And they never managed to get on the bandwagon of selling add-on packages like Hulu and Amazon did (although both of those products have such abysmal UX that you gain very little over using the respective native apps).
So now they're continuing to play up the original content game, which appears to be where the industry in general is headed, because the Paramount Consent Decree is so dead that it can't even hear our prayers.
They are a tech company insofar as they have invested heavily in the tech and as a result have the most reliable and usable platform (and the most research into recommendations), but the gap between Netflix and commodity streaming is narrow enough now that their edge in the technology space is gone. So they're basically a studio/theater at this point, like everyone else in the space. The only difference between Disney and Netflix is that Netflix doesn't have a theme park (yet!).
(Woof, so many caveats here!)
Unless they pivoted at lightning speed, I don't think this is true. When I saw the online subscriptions start for Netflix, I, some random person on the street, observed that the moment a white-box streaming service is created, all of the content-owners will have zero incentive to put their content on Netflix.
If I could think of this, then so could Netflix, and sure enough we started seeing netflix buying and producing content of their own pretty quickly.
Yes, they invent a little more technology than your typical small business spreadsheet. But tech is a commodity for them because the only strategy for tech is that “it has to be good”.