Netflix, Shein and MrBeast

A couple of years ago, I wrote an essay arguing that Netflix is a ‘TV company’, not a ‘tech company’, simply on the basis that all the questions that matter for it are TV questions. What rights, what kinds of shows, what commissioning models, what stars on what basis... all the questions that matter are LA questions. Netflix goes to LA and hires LA people to buy LA things from other LA people. It used technology as a new channel to enter the market, and that technology has to be good, but if it was only showing Friends and Cheers, no-one would care if the compression ratio was 20% better.

Part of this argument is that the technology of streaming itself is mostly a commodity - a hard commodity, and one that you have to get right, but still a commodity - and the key point of leverage is somewhere else. Five years ago a lot of people in Silicon Valley would have laughed at the idea that ‘legacy media companies’ could ever write good software, but Disney has done OK. It might be no more than ‘OK’, but what matters is the TV.

I think you could make a similar point about Shein - both Netflix and Shein realised that you can make far more SKUs if you’re not constrained by physical inventory - the time slots on linear TV and the store rooms of physical retail. So Netflix makes far more TV shows than anyone else, and indeed more than the entire US TV industry in 2006, the year before it started streaming. Shein adds 5-10k new products to the site every day where Zara adds 20-25k in a year. For Shein as for Netflix, the Internet is a new channel that works differently. If you don’t need thousands of physical stores, then you can turn over the product range much faster and reach new customers much more quickly - and so Shein is now bigger than H&M and on track to pass Inditex. But in the end it’s still all about the clothes, and all the questions for Shein are fast fashion questions.

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