How Netflix became a billion-dollar titan
Netflix is a business success and a product success. They played a difficult game and won. I don&#x27;t have anything disparaging to say about them as a company, but as a type of company....<p>We (as consumers &amp; residents of an economy) need to pay attention to what Peter Thiel called &quot;monopoly&quot; when he (playing provocateur) said that &quot;competition is for losers.&quot;<p>The reason Netflix became so successful, and managed to play with the entertainment oligopolies is that they built and control a bottleneck. They are the biggest streaming company, one of a handful in any given market.<p>Terrestrial TV came with frequency band issues. Broadcasting had to be licensed so everyone wouldn&#x27;t step all over eachothers&#x27; signals. This resulted in a structural oligopoly, where only a handful of licencees could broadcast.<p>Then cable came. This came with physical infrastructure, and structural tendencies to local monopoly. They also developed an oligopolistic industry structure, where licensing and content acquisition is only really possible if you are fairly big.<p>Now internet. Online, Netflix and other streaming companies have built their companies specifically around the  goal of owning a bottleneck.<p>This time, there is no tangible reason for it. It&#x27;s just a tendency of digital services that one service &quot;wins&quot; a race to monopolize a sector.<p>There are a ton of inefficiencies in an oligopolistic market.  I pay for house of cards by subscribing to Netflix. You pay for American gods by subscribing to Amazon. Why can&#x27;t we both watch both shows? It wouldn&#x27;t defund the shows, since we both keep paying the same. It wouldn&#x27;t be skin off either of our noses either. Show creators would prefer universal availability and so would consumers. The reason Amazon and Netflix want this situation to exist, is because it maintains their respective &quot;moats.&quot; There is no string underlying economic (pertaining to resource allocation and scarcity) reason for it.<p>Basically, we need to watch out for these intermediaries. They are very innovative and consumer friendly in their first decade or two. That&#x27;s how they succeed at first. Later, they succeed by maintaining their monopolies any way they can.