Scale Economies Shared ?

[dwy000]

1 minute ago, tnathan said:

This is true but it can also be structurally lower variable costs to serve as well. For example, moving from offline to online can improve unit economics, which combined with scale on OpEx creates a moat that's very hard to compete with. Carvana is knocking it out of the park with this model.

Very true. I was focused on the "scaled" rationale but any cost savings would apply. 

[Spooky]

Full disclosure I no longer own Netflix. I sold it (probably too soon). Feels like we are on a path to unlimited free content.

[nsx5200]

1 hour ago, Spooky said:

Full disclosure I no longer own Netflix. I sold it (probably too soon). Feels like we are on a path to unlimited free content.

Care to share your insight?  TIA

[Spooky]

1 hour ago, nsx5200 said:

Care to share your insight?  TIA

 

Just look at stuff like OpenAI's Sora and Meta's Vibes - unlimited AI generated content. The cost to create content will come down dramatically and erode Netflix's scale advantage.

[Saluki]

16 minutes ago, Spooky said:

 

Just look at stuff like OpenAI's Sora and Meta's Vibes - unlimited AI generated content. The cost to create content will come down dramatically and erode Netflix's scale advantage.

 

I don't think so because user generated content (YouTube) has been around a long time, and it's a different viewership model.

 

Moreover, the "scale economies shared" is a catchy term but the practice has been around a long time. Ford with the Model T's is the most well known example, but Rockefeller used it way before. In the Antitrust class I took in law school, the Standard Oil case is one of the early ones. When trying to refute the monopoly presumption, they showed that Rockefeller lowered prices and drove out his competition, but he kept prices low (and sometimes dropped them lower). So is this scale economies shared, or did he not have pricing power, and therefore didn't have monopoly power? 

 

Very few companies, like Costco, can maintain it for a long time. "Enshitification" seems to creep into a lot of businesses over time. Amazon experimented with one day delivery in my area, and now I routinely get 3 day delivery. And it's seldom the cheapest option, but it's convenient. Ditto with paying for Netflix vs Hulu with ads. Now you pay for Netflix and it has ads too. 

[Spekulatius]

The opposite from shared economics also exists and this is an example:

https://www.northcarolinahealthnews.org/2025/05/14/atrium-health-executives-get-hefty-pay-raises-amid-record-revenues/

The CEO salary of this non profit health care group is larger than ELV.

[Spekulatius]

On 11/14/2025 at 6:16 PM, Saluki said:

Amazon experimented with one day delivery in my area, and now I routinely get 3 day delivery. And it's seldom the cheapest option, but it's convenient. Ditto with paying for Netflix vs Hulu with ads. Now you pay for Netflix and it has ads too. 

?? The Netflix regular subscription had no adds and Amazon deliver got faster and faster for us. I have moved several times , last time last year and in all locations, Amazon just got faster with their deliveries. 

[schin]

18 hours ago, Spekulatius said:

The opposite from shared economics also exists and this is an example:

https://www.northcarolinahealthnews.org/2025/05/14/atrium-health-executives-get-hefty-pay-raises-amid-record-revenues/

The CEO salary of this non profit health care group is larger than ELV.

 

Scale Economies Unshared - I need to trademark that!!    Part of the concept is ultimately, that catches up to the company and its moat will start to erode and a challenger company will eventually kill it.

 

"Your margin is my opportunity." - Jeff Bezos

 

Ultimately, that greed and avaricious reduces the lifetime/compounding runway of the company.

[schin]

We talked about MELI and CPNG as examples of SES.

 

I wanted to know if there are any chinese companies that leverage this model?

 

Are there examples of SES in communistic or socialistic countries? Possibly, Spotify...but, with large companies in China, does anyone have examples from there?