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One thing I’m starting to see more and more is that software is no longer as big of a moat as it once was. Netflix gets to cruise along with a tech like evaluat

One thing I’m starting to see more and more is that software is no longer as big of a moat as it once was. Netflix gets to cruise along with a tech like evaluation because it pioneered online video streaming software. They caught the incumbents off guard and now the incumbents are starting to chip away at their tech moat. I think we’re going to start seeing this happen more broadly across the industry. AI will get to a point where it becomes easy to clone any app or service. At that point software is no longer your moat. Your moat is going to be content, community and branding. This kind of makes me wonder if open source get even more popular. If software is no longer a moat, then you may as well release it for free and cash in on the goodwill and community.

johnsmith1840 1mo ago
Not gonna happen software being cheaper simply moves the goalpost farther than before. Customers will expect and demand even greater capability and quality. A team of highly skilled engineers at netflix are gonna beat you massively at their own game. Acting like all code is flat and you just have to catchup to their level is false thinking. Netflix will be running 100x more AI than you with much better talent than you.
- TheCoelacanth 1mo ago
  I don't think software in general is flat, but video streaming is a mature technology and it's pretty easy to get good enough video streaming that customers don't care about it as a differentiating factor. If 8k TVs or VR suddenly take off, they might be able to take advantage of it, but right now it's only a minor advantage (in cost savings primarily). Customers choose based on content, not based on who's better at video streaming.
  - johnsmith1840 1mo ago
    Mature is like saying CPUs are mature. Technically true but the entite world is actively trying and failing to be taiwan. Video streaming is amoung the hardest technologies you can possibly make beyond a single cluster scale. Youtube is my favorite engineering system to read about. And man... chatgpt has a LOOOONG way to be able to make that from scratch. There is an argument though of "good enough" I don't think it logically holds since our entire ecobomy is built on that literally not being true but who knows.
    - TheCoelacanth 1mo ago
      I'm not saying it's not hard; I'm saying it's not a competitive moat. There are hundreds if not thousands of companies that successfully run streaming services and I doubt that any of them are more worried about the technology than they are about the content.
      - johnsmith1840 1mo ago
        True, but it's also pretty hard to tell the fuzzy edges of that. We are not privledged to info like "videos loading x% faster resulted in y% retention increase" Obviously a big company can push a big project I thought you were in the camp of a vibe coder going up against netflix and winning. Even before AI competition always caught up that really hasn't changed and basically is my point. AI doesn't change your competitive advantage against another company doing the same thing it's all down to operation excellence.
graceful6800 1mo ago
Netflix's moat is their CDN, which is fabulously expensive and complex hardware scattered across the entire planet. AI isn't gonna help you magic a CDN into existence
- otterley 1mo ago
  How is that a moat? All that matters is that the CDN is good enough to serve viewer traffic. If your CDN isn't up to snuff, the outcome is that the viewer can't play the video they want. AFAIK, no Netflix competitor is suffering from insufficient CDN resources. Sure, some choices make the cost of CDN higher or lower, but it's not material enough of an impact on competitors to matter. The actual moat for streamers has been, and always will be, the breadth and popularity of their exclusive content. Netflix will die if they don't continue to produce exclusive content that audiences will subscribe for.
  - simtel20 1mo ago
    Everything about a cdn is cost per MB, and Netflix has that priced at I don't know, I imagine almost zero, and maybe negative because they host with ISPs, which other cdns can't do. Which means their competitors must spend infinitely more money until they hit a scale where they can start to follow in Netflix's parh. Also, I imagine that buying hardware now, especially DRAM is four or more times as expensive as it was when Netflix paid for a lot of their hardware, so yeah, that.
    - otterley 1mo ago
      Do you seriously believe Apple and Disney are going to lose to Netflix over CDN costs? If so, let's place counterwagers.
      - simtel20 1mo ago
        That is not what I said. I am challenging your dismissal of the cost of bandwidth is material to the success of a cdn > All that matters is that the CDN is good enough to serve viewer traffic. If your CDN isn't up to snuff, the outcome is that the viewer can't play the video they want. AFAIK, no Netflix competitor is suffering from insufficient CDN resources My personal experience is that e.g. if your cdn can serve ads, but not video, then you lose subscribers. Extrapolating from that, if you lose money on every video a subscriber plays because of DTO costs, then you can't stay in business. Netflix and Amazon can afford their cdn. Maybe Disney can stay in business because they have the scale to get to the right COGS to meet their forecast, but for sure in the past they are accused of misleading investors as to their costs and revenue and their future revenue forecasts[1]. Since that's still underway, we may even know what part of their break-even calculations CDN costs are in the future. 1. https://www.ktmc.com/new-cases/the-walt-disney-company/?hl=en-US#:~:text=Specifically%2C%20Defendants%20repeatedly%20misled%20investors%20about%20the,Plaintiffs%20filed%20the%20Motion%20for%20Class%20Certification. https://www.ktmc.com/new-cases/the-walt-disney-company/?hl=e...

johnsmith1840 1mo ago

Not gonna happen software being cheaper simply moves the goalpost farther than before. Customers will expect and demand even greater capability and quality. A team of highly skilled engineers at netflix are gonna beat you massively at their own game. Acting like all code is flat and you just have to catchup to their level is false thinking. Netflix will be running 100x more AI than you with much better talent than you.

TheCoelacanth 1mo ago
I don't think software in general is flat, but video streaming is a mature technology and it's pretty easy to get good enough video streaming that customers don't care about it as a differentiating factor. If 8k TVs or VR suddenly take off, they might be able to take advantage of it, but right now it's only a minor advantage (in cost savings primarily). Customers choose based on content, not based on who's better at video streaming.
- johnsmith1840 1mo ago
  Mature is like saying CPUs are mature. Technically true but the entite world is actively trying and failing to be taiwan. Video streaming is amoung the hardest technologies you can possibly make beyond a single cluster scale. Youtube is my favorite engineering system to read about. And man... chatgpt has a LOOOONG way to be able to make that from scratch. There is an argument though of "good enough" I don't think it logically holds since our entire ecobomy is built on that literally not being true but who knows.
  - TheCoelacanth 1mo ago
    I'm not saying it's not hard; I'm saying it's not a competitive moat. There are hundreds if not thousands of companies that successfully run streaming services and I doubt that any of them are more worried about the technology than they are about the content.
    - johnsmith1840 1mo ago
      True, but it's also pretty hard to tell the fuzzy edges of that. We are not privledged to info like "videos loading x% faster resulted in y% retention increase" Obviously a big company can push a big project I thought you were in the camp of a vibe coder going up against netflix and winning. Even before AI competition always caught up that really hasn't changed and basically is my point. AI doesn't change your competitive advantage against another company doing the same thing it's all down to operation excellence.

graceful6800 1mo ago

Netflix's moat is their CDN, which is fabulously expensive and complex hardware scattered across the entire planet. AI isn't gonna help you magic a CDN into existence

otterley 1mo ago
How is that a moat? All that matters is that the CDN is good enough to serve viewer traffic. If your CDN isn't up to snuff, the outcome is that the viewer can't play the video they want. AFAIK, no Netflix competitor is suffering from insufficient CDN resources. Sure, some choices make the cost of CDN higher or lower, but it's not material enough of an impact on competitors to matter. The actual moat for streamers has been, and always will be, the breadth and popularity of their exclusive content. Netflix will die if they don't continue to produce exclusive content that audiences will subscribe for.
- simtel20 1mo ago
  Everything about a cdn is cost per MB, and Netflix has that priced at I don't know, I imagine almost zero, and maybe negative because they host with ISPs, which other cdns can't do. Which means their competitors must spend infinitely more money until they hit a scale where they can start to follow in Netflix's parh. Also, I imagine that buying hardware now, especially DRAM is four or more times as expensive as it was when Netflix paid for a lot of their hardware, so yeah, that.
  - otterley 1mo ago
    Do you seriously believe Apple and Disney are going to lose to Netflix over CDN costs? If so, let's place counterwagers.
    - simtel20 1mo ago
      That is not what I said. I am challenging your dismissal of the cost of bandwidth is material to the success of a cdn > All that matters is that the CDN is good enough to serve viewer traffic. If your CDN isn't up to snuff, the outcome is that the viewer can't play the video they want. AFAIK, no Netflix competitor is suffering from insufficient CDN resources My personal experience is that e.g. if your cdn can serve ads, but not video, then you lose subscribers. Extrapolating from that, if you lose money on every video a subscriber plays because of DTO costs, then you can't stay in business. Netflix and Amazon can afford their cdn. Maybe Disney can stay in business because they have the scale to get to the right COGS to meet their forecast, but for sure in the past they are accused of misleading investors as to their costs and revenue and their future revenue forecasts[1]. Since that's still underway, we may even know what part of their break-even calculations CDN costs are in the future. 1. https://www.ktmc.com/new-cases/the-walt-disney-company/?hl=en-US#:~:text=Specifically%2C%20Defendants%20repeatedly%20misled%20investors%20about%20the,Plaintiffs%20filed%20the%20Motion%20for%20Class%20Certification. https://www.ktmc.com/new-cases/the-walt-disney-company/?hl=e...