
Netflix deals at Sundance don’t make economic sense, they don’t have to - prostoalex
https://pando.com/2016/02/01/netflix-and-amazons-deals-sundance-dont-make-economic-sense-because-they-dont-have/7786b67b6819c04e01d83dbf55499944396d3c87/
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SwellJoe
I enjoy watching established players in industries that have exhibited decades
of abusive behavior toward independent artists and consumers get stomped on by
the new Internet economy. It's not that I necessarily think that in the end
Amazon and Netflix will treat creators or consumers any better than Hollywood,
though they might, it's hard to know yet. But, I think seeing the movie
industry and the music industry (in particular, the music industry) kicked in
the damned teeth until they cry for mercy is downright hilarious.

Hollywood thinks they have money and power...until an Apple, or Google, or
Amazon comes along and shows them what real economic clout looks like. Again,
it may not end up better for creative folks or consumers, but it sure is funny
while it's shaking out.

~~~
vinceguidry
> Hollywood thinks they have money and power...until an Apple, or Google, or
> Amazon comes along and shows them what real economic clout looks like.

Something I read once stuck with me. I don't remember the exact wording, but
basically the movie industry's entire market, soup to nuts, is an order of
magnitude less than just one of Disney's physical goods departments.

An entire industry's _market_ doesn't even hold a candle to one company's
_department_. Hollywood is stranger than you could ever know. It makes a
pitiful amount of money in relation to global capitalism, always has, always
will. But it wields outsized influence on American policymaking regardless.

Another quote comes to mind. When Apple released the Watch, someone asked one
of the top watch companies if they were worried about Apple butting into their
market. He just smiled and said something to the effect of, "Call me when they
can figure out how to get men to wear diamonds on anything other than a
watch."

Established industries have spent long, long periods of time getting to know
their customer. More often than not, they can take any upstart's best efforts
and treat it as outsourced R&D. Netflix and Apple can succeed to their hearts
content and still not have a prayer of unseating Hollywood.

~~~
Riod
On watches, I'd say when you have low cost smartwatches (like what happened
with phones), then things might change. Watches might become relegated to
being statements for the fashion conscious.

~~~
vinceguidry
> Watches might become relegated to being statements for the fashion
> conscious.

When have they ever not been? The watch, even back in it's heyday as something
you carried around in your pocket, has always been a status-first, function-
second fashion accessory. It has always been much, much cheaper to use the
established methods of telling time, most villages first infrastructure
investment was a town clock, once those became cost-effective to build.

It has only been very recently where it became fashionable for everyone to
wear one, and that's only because of cheap electronic watches. Cheap
electronic watches had the inevitable effect of whetting appetite for luxury
options. Casio was the best thing that ever happened to luxury watch makers.

~~~
Riod
Right. And the choice could now be upgrading to a smartwatch from Casio as
opposed to a higher end Swatch. Check out Swatch's share price since 2013.

No clue why Europe is the only relevant market you're referencing here. Either
way no clue what the market size for town clocks was.

~~~
vinceguidry
People upgrading from Casio to Apple are of no concern to higher-end makers
like Patek Philippe. Swatch is not a premium watch maker. What Patek and the
like might be worried about is people moving from Patek to Apple.

But when you start to think more carefully about that scenario, it's rather
ridiculous. People into watches don't just buy one. You don't "switch" brands,
you just select a different one for your next purchase. It could be another
Patek, perhaps an Audemars Piguet, or even an Apple Watch.

The idea that someone buying these watches would sell them all and buy an
Apple Watch, never to own another high-end watch again, is simply absurd.

~~~
SwellJoe
_" People into watches don't just buy one. You don't "switch" brands, you just
select a different one for your next purchase. It could be another Patek,
perhaps an Audemars Piguet, or even an Apple Watch."_

You're talking about collectors. They already do not represent a significant
portion of the current market for high end watches. Sure, wealthy people who
like watches probably have one or two "nice" watches. But, people who collect
things will never be the majority of a mass market consumer good. There are
car collectors with classic cars, that won't save internal combustion engines.
There are people who collect old computers, too, but no one is seriously
suggesting the Commodore 64 will ever be a mass market product again. People
collect dolls, but Barbie doesn't make their millions from sales to
collectors; they make their millions from the mass market.

So, you're arguing there will always be classic watch collectors. No problem.
I'm sure there will be. Hell, there are still people that knit their own
sweaters. Watch collectors will not be common, and they will not represent a
multi-billion dollar market.

~~~
vinceguidry
> You're talking about collectors.

No, I'm not. I'm talking about people that buy high-end watches. They're like
ties, it doesn't really make sense to own just one. You need one for every
occasion, to match all the types of outfits you wear.

It makes sense for you to own just one high-end watch. But the kind of person
that can pay $30K for a watch is not you. They are the people that keep Patek
Phillipe in business. They made €765.6 million in 2013. The Swiss watch
industry as a whole is around $10 billion.

~~~
Riod
$800MM is a small business and $10BN is a small industry fyi.

~~~
vinceguidry
I never said it wasn't. The theme is small, entrenched industries that seem
way bigger than they are. Hollywood seems so much bigger than it is because
geopolitically, US culture exports are a big contributor to global goodwill.

The watch industry is sheltered by old, old money, patronized by the kind of
people who could comfortably buy up the entire industry if they saw the need.

Market logic is a useful thing to grasp, but there are bigger things in the
world than markets, and it's really useful to be able to understand how they
work. What looks small often isn't. Bigger, better, faster, stronger are not
the only rules the world lives by. There exist points at which normal logic
upends and irrationality rules.

------
Steko
Netflix and Amazon are doing what Murdoch did in the 90's when he massively
outbid CBS (by over $100 million/year) to get the NFL on FOX: he wasn't just
buying football games, he was buying a ticket to the big time network business
and simultaneously shutting doors for other fledgling channels from Warners
and Paramount that were following FOX's path.

~~~
JackFr
Overpaying for the NFL was also a message to the affiliates, that we have deep
pockets and are in this for real.

------
mwsherman
Commoditize complements until you run out of complements (for which one
shouldn’t hold one’s breath).

