What Is a Tech Company?
Comment of the Day

September 03 2019

Commentary by Eoin Treacy

What Is a Tech Company?

I found this a thoughtful article from the Stratechery blog discussing what should qualify as a technology company. Here is a section on Netflix:

The question of whether companies are tech companies, then, depends on how much of their business is governed by software’s unique characteristics, and how much is limited by real world factors. Consider Netflix, a company that both competes with traditional television and movie companies yet is also considered a tech company:

There is no real software-created ecosystem.
Netflix shows are delivered at zero marginal costs without the need to pay distributors (although bandwidth bills are significant).
Netflix’s product improves over time.
Netflix is able to serve the entire world because of software, giving them far more leverage than much of their competition.
Netflix can transact with anyone with a self-serve model.

Netflix checks four of the five boxes.

Eoin Treacy's view

TV shows and movies are delivered at no additional marginal cost once produced. That is true but they do not have the same residual value as software because unless the show is particularly good the vast majority of people will never watch it again.

Click HERE to subscribe to Fuller Treacy Money Back to top