Ask HN: Why Netflix still using AWS when Amazon is their biggest competitor?

5 points by horizontech-dev 6 years ago | 21 comments

I have been wondering about this question for some time. To give context, I get it, the engineers and management at Netflix continuously evaluating (and it's not an easy task), but what's something holding them moving off of AWS like Dropbox?

Aren't they literally giving money to their competitor?

0xy 6 years ago |

A lot of Netflix's technical "secret sauce" is their own infrastructure via the Open Connect initiative.

You cannot get a silky smooth experience across that many congested networks with just bare AWS.

Why would Netflix want to take on the enormous risks of self-hosting? They don't have the experience and they don't have the skills. They can hire the appropriate people but it's extremely expensive. AWS provides a lot of very valuable tooling and expertise baked into the service price.

treyfitty 6 years ago |

No one will know, and those that do will never reveal it. But I can surmise that it's a mutually net beneficial arrangement in the short-run, with Netflix expecting a better solution to present itself either internally or externally at some point. Otherwise, you're right, Netflix wouldn't use AWS and AWS would not supply to Netflix.

In a way, they're allocating money and resources to Amazon rather than developing internally simply because the long-term ROI doesn't warrant it.

And let's not discount the most obvious reason why it's probably not even a concern for Netflix: Amazon Prime Video sucks. Sure, Blockbuster probably said the same thing about Netflix at one point, but it's hindsight. I think most people, at the time, would have never guessed Netflix would be the one to pivot to online streaming either.

It's a very though provoking question and there's no way to distill it into one answer, so I'm just providing my POV.

horizontech-dev 6 years ago | |

> rather than developing internally simply because the long-term ROI doesn't warrant it

To clarify, I am not expecting them to build their own cloud, but why they using it when other providers have caught up pretty much.

the_hoser 6 years ago |

You're really looking at this from the wrong direction. Your competitor doesn't need to fail in order for your own business to succeed. It isn't a zero-sum game.

It wouldn't surprise me if Netflix had that meeting at some point. What would it cost them to run their own infrastructure? Would that be less than the cost of staying with AWS? Is Amazon exploiting their position as Netflix's hosting provider to unfairly compete with them? Do they fear that they might in the future?

At the end of the day, the answer was very likely a solid "no". Many industries are full of examples of competitors working together to the benefit of both companies. Just look at the aerospace industry.

horizontech-dev 6 years ago | |

Thanks for the response. But totally disagree.

> Would that be less than the cost of staying with AWS? I think the answer is Yes. The main advantage of Cloud computing I think is the speed to market, not the cost. Excerpt from https://techcrunch.com/2019/06/21/three-years-after-moving-o... "Dropbox still believes it made the right decision and has found innovative ways to keep costs down"

> Is Amazon exploiting their position as Netflix's hosting provider to unfairly compete with them? I completely disagree. Here is one example (Certainly, a simple G search should give enough examples) https://www.wsj.com/articles/amazon-scooped-up-data-from-its...

bengunnink 6 years ago | | |

The answer to your question is "Because it makes business sense to do so". Whether you can understand their reasons or not, the best indicator that Netflix has good reasons to use AWS is that it continues to do so. And that will be true until the (possible) day that it doesn't anymore.

> I think the answer is Yes.

So what you're saying is that (1) Netflix is already secretly planning to move away from AWS, in which case your question is moot, or (2) everyone involved in platform decisions at Netflix is an idiot that can't do math.

the_hoser 6 years ago | | |

Got any information that isn't behind a paywall?

tobyhede 6 years ago |

I would expect Netflix to have reasonably detailed strategic analysis and projections of all of the available options - moving to Google, moving to Azure, moving to Oracle, moving to multi-cloud, colocation, not to mention things we can't even imagine because ... well, we have no real idea.

At different points any one of these may make strategic sense, but as others have highlighted here such moves would consume resources that could be allocated to other areas.

My take would be that increasingly the Netflix business model is really content and production. Disney is the real competitor here. Technology is necessary, but not sufficient.

horizontech-dev 6 years ago | |

> I would expect Netflix to have reasonably detailed strategic analysis and projections of all of the available options - moving to Google, moving to Azure, moving to Oracle, moving to multi-cloud, colocation, not to mention things we can't even imagine because ... well, we have no real idea.

I think the same too. Curious to confirm the thought process and curious to hear if there any anecdotes

tobyhede 6 years ago |

Also ... Dropbox is a good example of a product that has lost it's way. It went from a very simple and clear product with strong value to something we all now work around. Its more reliable to email or slack files than deal with whatever confusing thing Dropbox is doing.

horizontech-dev 6 years ago | |

And you think that's because they moved off of AWS?

tobyhede 6 years ago | | |

I am observing that there is no correlation between location of hosting and quality or user experience. OP used DropBox as a reference for a company that moved off AWS. My observation is that DropBox sucks.

some_furry 6 years ago |

Amazon Web Services (AWS) and Amazon Prime, while part of the same company, are vastly different services.

While it's fair to call them competitors, it's not really an apples-to-apples comparison.

surround 6 years ago | |

AWS and Amazon e-commerce are vastly different services, yet Walmart refuses to use AWS because Amazon is also their largest competitor. In fact, Walmart built themselves an entire private cloud to avoid using AWS.

So OP actually raises a very good question: why does Netflix use AWS when Walmart does not?

JMTQp8lwXL 6 years ago | | |

The decision to build a private cloud sets back other priorities, like competing with Amazon on Grocery. It may, or may not, pay off for Walmart. If Walmart did store their data in Amazon's cloud, it is possible Amazon could use that information (sales, prices, etc) to more efficiently compete.

Conversely, if Netflix built out their own cloud, it could have come at the expense of delivering more content, which could risk unseat their position as the leader of streaming space.

q4814 6 years ago | | |

Because AWS is a huge profit center for Amazon, they are able to invest those profits into reducing prices on the retail side of their business - amazon.com. Netflix doesn't compete with Amazon's retail business, Walmart most certainly does.

bradknowles 6 years ago | |

Not really part of the same company. AWS is a subsidiary, and is run as a separate company. To them, Amazon is just one of their biggest customers — and not even THE biggest customer.

treyfitty 6 years ago | |

I think you're misinterpreting what OP is inquiring.

Amazon is the company. The company offers AWS and Amazon Prime Video (I am assuming you mean Amazon Prime Video rather than the e-commerce side of the business). Ergo, providing AWS enriches Amazon. Assuming funding within the company is fungible, Netflix is indirectly helping Amazon Prime Video.

OPs question is: Let's assume Netflix takes this as the antecedent- why do they still choose to indirectly enrich Amazon Prime Video, their competitor?