Business Lessons from Reed Hastings (Netflix)


nflx-whats-next_large

The way Netflix has evolved and has reached where it is today is incredible. A detailed 2 part article on business lessons from Reed Hastings.

3. “By 2011 we realized that many of the firms we were buying from were eventually going to want to run their own streaming service. We had no reliable supply. We had to go vertical since it was not going to be in their interest to sell to us over time.” 

Hastings is saying that Netflix understands the dangers associated with “wholesale transfer pricing.” Eugene Wei has written specifically about how the concept applies to Netflix:

“Netflix had a great advantage when First Sale Doctrine permitted them to buy DVDs at the same wholesale price as any retailer since it capped their costs. But in the TV/movie licensing world, the content owner can constantly adjust their price to squeeze almost every last drop of margin from the distributor as you can’t find perfect substitutes for the goods being offered. Ask TV networks if they make any money licensing NFL, NBA, and MLB games for broadcast. Hint: the answer is no. In the digital world, transfer pricing can be even more of a cruel mistress.”

The complete article

25iq

Image source

One thought on “Business Lessons from Reed Hastings (Netflix)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s