Netflix: From DVD Dominance to Streaming
In the summer of 2008, Netflix was a profitable DVD-by-mail company with a parlor trick. The trick was called “Instant Queue,” a clunky feature that required fifteen minutes of setup on Windows machines running Microsoft Silverlight, and it offered a thin selection of titles that most subscribers ignored. The company had 8.4 million members, nearly all of them paying $18.99 per month to receive red envelopes in the mail. The margins on this business were luscious: once Netflix bought a DVD, it could rent it out hundreds of times under the first-sale doctrine, capturing pure profit after the initial $15 purchase price. The business generated cash like a utility, predictable and thick.
But Reed Hastings had seen the arithmetic of the future, and it was terrifying. Streaming video offered something DVD rental never could: zero marginal cost per additional viewer. Once Netflix paid for the bandwidth and the content license, the millionth stream cost the same as the first. The potential operating leverage was infinite. The catch was that unlike DVDs, where copyright law allowed exhaustion of rights, streaming required negotiating licenses with every studio for every title. And the studios, in 2008, had not yet realized what their content was worth in this new format. Netflix had a narrow window to convert its high-margin DVD subscribers into lower-margin streaming customers before the content owners understood the value they were giving away. The company was not simply adopting a new technology. It was attempting to jump between two moving trains, one decelerating, one accelerating, while carrying a heavy load of cash that might not survive the transfer.
The economics of this transition inverted every traditional media model. In the DVD business, Netflix paid once and earned forever. In streaming, Netflix had to pay forever to earn once. The Starz deal, signed in October 2008 for $25 million over two years, granted Netflix access to a library of recent films and television shows that transformed the Instant Queue from a novelty into a service. The price was, by any standard, theft. Starz treated streaming as an ancillary market, a bonus round to cable licensing. Netflix treated it as the main event. Within two years, the company would sign a five-year deal with Epics, a joint venture of Paramount, Lionsgate, and MGM, for $800 million. That represented a thirty-two-fold increase in content costs in twenty-four months. The repricing had begun.
This is the central tension that defines Netflix during this period: the company must acquire subscribers faster than content costs rise, but content costs rise precisely because the subscriber base has grown large enough to prove the model works. It is a race against the inevitable moment when suppliers realize they are selling diamonds for the price of coal. The structural advantage of first-mover status is not permanent; it is a temporary arbitrage that closes as soon as the counterparty learns to count. Netflix’s entire enterprise rests on the bet that it can reach a scale of indispensability, where studios cannot afford to withhold content because the Netflix audience represents too much revenue, before the studios decide they would rather keep that audience for themselves.
The urgency of this race shaped every strategic decision between 2008 and 2012. Netflix could not afford to build content slowly, testing what worked. It had to buy in bulk, paying $800 million to Epics before the streaming business had proven it could generate equivalent revenue. This required a peculiar kind of courage, or desperation: the willingness to cannibalize a cash-generative business to fund a capital-intensive replacement that might not mature before the original business died. The DVD rental service was throwing off cash, but every subscriber who switched to streaming reduced the company’s margin immediately. A DVD customer generated $18.99 with minimal ongoing cost. A streaming customer at $7.99 (and later prices) generated less revenue and required massive ongoing content expenditure. The transition was not merely technological; it was a deliberate compression of unit economics in exchange for theoretical scale.
Yet the scale, if achieved, offered something unique in media history. Traditional cable networks faced hard constraints: each additional viewer strained infrastructure, and carriage fees were negotiated market by market. Netflix, once it built its content delivery network and optimized its video codecs, could serve the entire United States from centralized servers. At peak times, Netflix would account for forty percent of concurrent U.S. internet traffic. This concentration created a negotiating position with internet service providers that no single cable channel could match. When you represent a fifth of all downstream traffic, you are no longer a customer of the broadband providers. You are a load they must carry to keep their own subscribers satisfied. The operational leverage was real: every million subscribers added reduced the per-stream cost of delivery, while the fixed cost of content was amortized across an ever-larger base.
But this leverage came with a hostage situation. Those same broadband providers were cable companies watching Netflix destroy their video businesses. Comcast and Time Warner sold bundles of television channels that Netflix was systematically unbundling. The cable companies owned the pipes, and they had both the technical ability and the economic motive to degrade Netflix traffic or demand payment for prioritization. Netflix had no alternative distribution channel for the majority of American customers. The company was building a business that depended entirely on infrastructure controlled by its most motivated enemies. This was not a hypothetical risk. It was a structural dependency on a supply chain that had incentive to strangle the product. Netflix could optimize its codecs and build its own content delivery network, but the last mile remained controlled by companies that lost money every time a household cut the cord.
The response to this vulnerability reveals one of the most underappreciated structural advantages in Netflix’s early streaming strategy: the decision not to build hardware. In 2007, Netflix had hired Anthony Wood to build a set-top box, a “Netflix box” that would sit beside the television and deliver streams directly. Hastings killed the project, recognizing that entering the hardware business would turn every consumer electronics manufacturer into a competitor. Instead, Netflix spun out the project as Roku, invested six million dollars, and made the service available on Xbox 360, PlayStation, and eventually every device with a screen. This was not merely a distribution choice; it was a strategic abdication that created an ecosystem. By refusing to compete with device makers, Netflix secured their cooperation. The Xbox became a Netflix box. The PlayStation became a Netflix box. The smart TV became a Netflix box. Netflix achieved ubiquity without capital expenditure, while competitors who tried to control the hardware, like the cable companies themselves, faced the impossible task of manufacturing and retailing physical products at scale. The Roku decision meant that Netflix was everywhere the internet reached, without having to build anything physical beyond servers.
This ubiquity was essential because the content acquisition strategy required reaching critical mass before the content owners rebelled. The Starz deal was a steal because Starz did not believe streaming would cannibalize its cable business. By the time of the Epics deal, the studios understood better, but they still needed Netflix’s distribution more than they feared it. Netflix was betting that this dependency would persist, hat studios would continue to view Netflix as a wholesale customer rather than a competitor even as the streaming service grew larger than most cable networks. This is the fragile long-term assumption upon which everything rests: that content owners will remain suppliers rather than attempting vertical integration.
The history of media suggests this assumption is temporary. Studios exist to capture the value of their intellectual property. They tolerate middlemen only when the middlemen provide distribution capabilities the studios lack. Netflix was providing exactly that in 2010, when broadband streaming was technically complex and device fragmentation was high. But as the technology standardized, the studios’ incentive to withhold content increased. Every dollar Netflix paid for the Epics library was a dollar the studios could theoretically earn themselves if they controlled the customer relationship. The thirty-two-fold increase in content costs from Starz to Epics was not merely inflation; it was the studios recognizing their error and beginning to reclaim the margin. Netflix had to hope that by the time the studios fully woke up, the streaming service would be so large that withholding content would be economic suicide: denial of access to fifteen percent of all internet traffic.
This hope required flawless execution of the cash flow transition. The DVD business was dying, but it was not dead. It threw off cash that funded the content acquisitions necessary to build streaming. If the DVD business declined faster than streaming subscriptions grew, Netflix would face a liquidity crisis, nable to fund the content necessary to attract subscribers, unable to retain subscribers without new content. The operating model required spending billions on content with uncertain return while the revenue base shifted from high-margin physical rental to low-margin digital subscription. The margin compression was intentional but dangerous. The company was trading a business with forty percent margins for one that might, at scale, achieve twenty percent margins, but only after passing through a valley where margins were negative and cash was burning.
The complexity multiplied with global expansion. Content licensing is fragmented by territory; a film might be owned by one studio in the United States and another in Germany, or available for streaming in one market but locked in exclusive cable deals in another. Netflix could not simply flip a switch and go global. Each market required renegotiating rights, multiplying the capital intensity of the content strategy. A single studio could block Netflix from entering an entire country, or demand such exorbitant rates that the market became unprofitable. The race to scale was not merely domestic; it was a global sprint to sign deals before local competitors emerged or before studios realized they should hold back their content for their own future streaming services.
Within this constraint, leadership functioned as an economic variable in ways that pure analysis often misses. Hastings’ decision to charge forward with the Epics deal, $800 million at a time when streaming revenue was a fraction of that, was not a calculation of predictable returns. It was a recognition that hesitation meant death. The content window was closing. Studios were learning. Competitors like Hulu (owned by the studios themselves) and Amazon were emerging. Netflix had to bid aggressively for content not because the immediate return justified it, but because the absence of that content would stall subscriber growth, which would reduce negotiating leverage for the next deal, which would raise content costs per subscriber, which would make the business model collapse. The Epics deal was defensive as much as offensive: a purchase of runway.
This same logic drove the rapid expansion into original programming, though that lay slightly beyond the immediate 2008-2012 window. The trajectory was clear: if Netflix did not own the content, it would be subject to the repricing whims of suppliers who were also competitors. The only way to break the cycle of rising content costs was to create content that could not be withdrawn. But original programming required even greater upfront capital with even more uncertain returns. It was a solution to the content cost spiral that introduced new risks of its own.
The defining structural constraint of this period is that Netflix must remain attractive to subscribers while its supplier base becomes increasingly hostile. Every subscriber added makes the platform more valuable to studios, which makes the studios more likely to demand higher prices or withhold content entirely. The network effects work in reverse as well as forward: if a major studio pulls its library, the subscriber value proposition weakens, which slows growth, which weakens negotiating leverage with remaining studios, which can trigger a cascade of defections. Netflix was building a walled garden using bricks rented from people who were digging tunnels to escape.
And yet, the operational advantages were substantial enough to justify the risk. By 2010, Netflix had built a streaming infrastructure so efficient that competitors starting from zero could not match its delivery costs. The company owned its video codec technology and its content delivery network, optimized for the specific patterns of video consumption. When a subscriber pressed play, the data traveled over paths Netflix controlled, compressed in ways that reduced bandwidth costs without degrading quality. This was not merely technical excellence; it was a cost structure that improved with scale. The more subscribers Netflix added, the cheaper it became to serve each one, while the content costs, though rising, were fixed per title regardless of audience size. A film that cost $10 million to license generated the same cost whether one million people watched it or ten million. The leverage was real, provided the titles were popular enough to drive subscriptions.
The fragility remains the studio relationship. The $25 million Starz deal represented a market inefficiency that closed rapidly. The $800 million Epics deal represented the beginning of that closure. Future deals would trend toward the true economic value of the content, which was the full margin of a direct-to-consumer relationship minus some wholesale discount. As the studios built their own streaming capabilities, Disney Plus, HBO Max, Paramount Plus were inevitable once the technology became commoditized, Netflix would face a choice between paying prices that eliminated its margin, or losing content that eliminated its value proposition. The assumption that studios would always need Netflix more than Netflix needed any single studio was true only until it wasn’t.
In the narrow window of 2008 to 2012, Netflix executed a maneuver that will be studied for decades: the conversion of a physical media rental business into a digital media platform while under direct competitive threat from its own suppliers. The company used the cash flow of a dying business to fund the content acquisitions of a nascent one, betting that subscriber velocity could outrun content inflation. It avoided the hardware trap that snared competitors, secured distribution through former enemies in the gaming industry, and built infrastructure that turned internet service providers into unwilling accomplices.
But the fundamental nature of the business is a race. Content costs rise exponentially because they are tied to the recognition of value, while subscriber growth follows an S-curve that eventually flattens. The only defense is to become so large that exclusion from Netflix constitutes a loss of reach equivalent to missing cable television in 1995. That scale, if achieved, creates a new equilibrium where studios cannot afford to defect. But the path to that equilibrium is narrow, requiring billions in upfront spending with no guarantee that the destination will be reached before the suppliers cut off the supply. Netflix is not merely a media company or a technology platform. It is a bet on the velocity of platform adoption outpacing the rational self-interest of content owners: bet that, for a few critical years, the suppliers will remain asleep to the value of their own libraries, giving Netflix time to build a fortress so large that the drawbridge can never be raised.
The mechanics of this race deserve closer inspection, because the arithmetic is unforgiving and the margin for error is narrower than the subscriber growth curves suggest. Consider the cash flow transition in concrete terms. In 2008, Netflix generated roughly $1.4 billion in revenue from DVD subscriptions, with gross margins near fifty percent after accounting for postage, warehouse operations, and disc replacement. The physical business required capital expenditure, distribution centers, sorting equipment, inventory, but the working capital cycle was favorable. Subscribers paid monthly in advance; Netflix purchased discs and amortized them over years. The business threw off cash that could be redeployed immediately.
Streaming reversed this cycle. The Epics deal required $800 million over five years, paid whether subscriber growth materialized or not. Unlike DVD inventory, which could be liquidated or depreciated slowly, content licensing fees were sunk costs with no residual value. If subscriber growth stalled, Netflix could not return unused “streaming capacity” to the studio for a refund. The company was converting a business with negative working capital requirements into one with massive upfront capital intensity, precisely at the moment when the legacy business began its decline.
The trajectory of that decline was unpredictable and uncontrollable. DVD subscriptions peaked in 2011 at 14 million domestic subscribers, then fell with accelerating speed, own to 9 million by 2013, 5 million by 2015, and effectively zero by the decade’s end. The slope of this curve determined the length of Netflix’s runway. If DVD had collapsed two years faster, f the Redbox kiosk network had expanded more aggressively, if Blockbuster had managed a competent digital pivot, if consumer behavior had shifted more rapidly: he streaming business would have faced a cash crisis before achieving the scale necessary to fund its content obligations. Hastings was not merely betting that streaming would succeed; he was betting that DVD would die slowly enough to finance the transition but fast enough to force the organization through the window of opportunity before studios fully recognized the value of their streaming rights.
This interdependence created a peculiar strategic bind. Netflix needed to degrade its own DVD business to push subscribers toward streaming, thereby securing the higher lifetime value of digital customers and the operational leverage of the streaming model. Yet it could not degrade DVD so quickly that the cash flow disappeared before the streaming business became self-sustaining. The company was effectively managing the decline of its primary profit center while racing to build a replacement that was, for several years, structurally unprofitable on a unit basis.
The “Instant Queue” launch in 2008 illustrates this tightrope act. Initially, streaming was bundled free with DVD subscriptions: “watch now” feature designed to increase satisfaction and reduce churn among physical renters. This pricing strategy served dual purposes. It trained consumers to associate Netflix with streaming video, establishing the brand habit before competitors could enter. Simultaneously, it disguised the true cost structure of streaming by burying it within the high-margin DVD revenue stream. Subscribers perceived they were getting additional value, not shifting to an inferior economic product. But this bundling masked the approaching crisis: once streaming became the primary offering, Netflix would have to charge standalone prices that reflected the true cost of content acquisition, prices that would necessarily be lower than DVD (due to consumer price sensitivity for digital goods) while supporting higher underlying costs.
The 2011 Qwikster debacle, Hastings’ attempt to separate DVD and streaming into distinct businesses with distinct brands, represents the moment when this arithmetic became politically untenable. The separation was economically rational: the two businesses had different cost structures, different growth trajectories, and different strategic imperatives. Combining them created cross-subsidies that obscured true performance and delayed necessary pricing adjustments. Yet the market reaction was savage because it revealed the uncomfortable truth that streaming, standing alone, could not yet support the valuation or the service quality that subscribers expected. The retreat from Qwikster was not merely a public relations failure; it was a confirmation that the transition was still incomplete, that the DVD business remained essential to the illusion of value, and that Netflix could not yet survive the exposure of its true unit economics.
This episode highlights how leadership functions as an economic variable in the streaming transition. Hastings’ decisiveness: he willingness to cannibalize, to spend aggressively on content before revenue justified it, to spin out Roku rather than capture that value vertically, reated optionality that more cautious management would have foreclosed. But the same decisiveness produced the Qwikster error: a move that was strategically correct (separating the cost structures) but tactically premature (before streaming could stand alone). The economic cost of this mistake was measured not just in the stock price decline and subscriber churn of late 2011, but in the strategic constraint it imposed. After Qwikster, Netflix could no longer aggressively separate the businesses or raise streaming prices to reflect true costs. The company was forced to maintain the bundled illusion longer than the economics warranted, extending the period during which DVD cash flow had to subsidize streaming losses.
The Roku decision, by contrast, demonstrates how governance structure and capital allocation discipline can create durable advantage. When Hastings killed the Netflix box project, he was choosing to forgo vertical integration that would have captured device margin in favor of horizontal ubiquity that would capture subscriber margin. This was not obvious at the time. Apple was proving that integrated hardware-software ecosystems generated superior margins and customer lock-in. Amazon would later attempt its own set-top boxes and tablets to control the streaming endpoint. Hastings recognized that for Netflix, device manufacturing was a distraction from the core race. Building factories, managing inventory, negotiating retail shelf space, hese activities would have consumed management attention and capital at exactly the moment when content acquisition required every available dollar and every ounce of strategic focus.
The Roku spin-out also solved a coordination problem. By making Anthony Wood’s project an independent company in which Netflix invested but did not control, Hastings secured preferential treatment without assuming the risk of hardware failure. If Roku failed, Netflix lost $6 million. If Roku succeeded, Netflix gained a dedicated distribution channel that would prioritize its service. More importantly, Roku’s independence allowed it to become the neutral platform for all streaming services, which made it attractive to consumers who wanted variety, which increased Roku’s market penetration, which made Netflix available in more households than any proprietary device could have achieved. The decision to not own Roku was a decision to own the relationship with the customer regardless of which device they used: bet on software over hardware, on content over container, that preserved capital for the content arms race.
The international expansion multiplies these tensions into a matrix of complexity that is often simplified in retrospective narratives. When Netflix entered Latin America in 2011 and Europe in 2012, it faced not merely translation costs or marketing expenses, but the fragmentation of content rights across territorial boundaries. A film might be available for streaming in the United States because Netflix had secured rights from a studio’s domestic distribution arm, but unavailable in Brazil because a local television network held exclusive broadcast rights through 2015. Each market required rebuilding the content library from scratch, negotiating with entities that had varying levels of sophistication about streaming value, and facing local competitors who understood these rights structures better than Netflix did.
The economic consequence was that international expansion did not benefit from the same network effects that drove the domestic business. Adding a subscriber in Brazil did not increase Netflix’s leverage with a studio regarding U.S. rights, nor did it reduce the per-stream delivery cost for American subscribers. The fixed costs of content acquisition multiplied by territory, while the revenue per subscriber was often lower due to purchasing power disparities and competitive pricing pressure. Netflix was not scaling a single platform; it was building dozens of mini-platforms, each requiring its own content outlays and each vulnerable to local competitors or rights holders.
This territorial fragmentation also created arbitrage risks that threatened the entire licensing model. If Netflix offered a film in the U.S. but not in Canada, tech-savvy users employed VPNs to spoof their location, accessing content that Netflix had not paid for in that territory. Studios viewed this leakage as a breach of the territorial exclusivity that underpinned their windowing strategies. The technical and legal costs of geo-blocking, of enforcing territorial boundaries in a borderless medium, added friction to the expansion and created ongoing tension with content partners who suspected Netflix was not sufficiently invested in protecting their rights.
The broadband dependency, meanwhile, evolved from theoretical risk to active negotiation. By 2010, Netflix represented twenty percent of all U.S. internet traffic during peak hours, rising to forty percent of downstream traffic in certain markets. This concentration made Netflix simultaneously indispensable and vulnerable. Comcast and other ISPs faced a classic innovator’s dilemma: Netflix was destroying their video revenue (cable subscriptions) while demanding massive infrastructure investments to support its traffic (broadband capacity). The economic rationality of throttling Netflix traffic, of degrading service quality to protect legacy video products or to extract tolls from the content provider, was overwhelming.
The 2010-2014 period saw this tension manifest in disputes over peering agreements and net neutrality. Netflix initially attempted to shift the cost of traffic to ISPs, arguing that subscribers were already paying for broadband access and that ISPs should bear the cost of delivering the content those subscribers requested. The ISPs responded that Netflix was an asymmetric load, sending vastly more data to their networks than it received, and that the company should pay for direct interconnection or for caching servers within the ISP infrastructure. When Netflix’s traffic was routed through congested intermediate networks rather than direct peering connections, subscriber experience degraded. Buffering increased. Picture quality dropped. The technical performance of Netflix became hostage to negotiations between backbone providers and last-mile ISPs, negotiations in which Netflix had limited leverage because it could not credibly threaten to bypass the ISP infrastructure.
The resolution, Netflix agreeing to pay Comcast and other major ISPs for direct interconnection, represented a structural cost that the streaming model had not initially anticipated. These payments were not trivial; they represented a tax on the streaming business that DVD rental had avoided. The postal service did not charge DVD Netflix extra for delivering red envelopes during peak holiday seasons; it charged the same stamp price regardless of volume. Broadband, by contrast, was not a neutral postal system but a contested infrastructure where the carrier had incentive and ability to discriminate. The “postage” for streaming was negotiable and subject to extraction by parties with local monopoly power.
This structural vulnerability remains unresolved even as Netflix built its own content delivery network, Open Connect. By placing caching servers directly inside ISP facilities, Netflix reduced the transit costs and improved performance, but it did not eliminate the dependency. The ISP still controlled the last mile, still set the price of broadband access, and still had the technical capability to prioritize its own video traffic over Netflix’s packets. The Open Connect strategy was a mitigation, not a solution: way to reduce friction in the pipe without controlling the pipe itself.
The content cost spiral operates with similar mechanical inevitability, though its dynamics are less technical than contractual. The Starz deal ($25 million for two years) established a baseline price for premium film content in the streaming window. The Epics deal ($800 million for five years) reset that baseline by a factor of thirty-two. But these were not isolated transactions; they were information events that informed every subsequent negotiation. When Lionsgate saw that Netflix would pay $800 million for the Epics library, their estimate of the value of their own content, whether in the Epics joint venture or their standalone library, increased proportionally. Each deal set a floor for the next deal. The studios were learning the value of their content through Netflix’s own bidding behavior.
This creates a ratchet effect that is difficult to escape. Netflix could not easily reduce content spending without triggering a death spiral: fewer titles lead to higher churn, which reduces subscriber growth, which weakens negotiating leverage, which increases content costs per subscriber, which necessitates either price increases (further reducing growth) or further content cuts. The only escape from the ratchet is through scale so massive that the per-subscriber amortization of content costs becomes negligible, or through original content that eliminates the supplier entirely. Both paths require capital intensity that makes the DVD-to-streaming cash flow transition even more precarious.
The original content pivot, which fully emerged after the 2012-2014 period but was inevitable given the mechanics described, represents Netflix’s attempt to convert variable costs (licensing) into fixed costs (production) while capturing the long-term value of intellectual property. But this solution introduces its own risk profile. Licensed content carries no production risk, f a film flops, the studio bears the loss, while Netflix merely suffers opportunity cost. Original content places the production risk squarely on Netflix’s balance sheet. A $100 million series that fails to attract subscribers is a total loss, not a shared disappointment. The transition from aggregator to studio is a transformation of the business model that replaces the content cost spiral with a content production gamble.
Looking back at the 2008-2012 window, the bear case is not merely that Netflix failed to achieve scale, but that it achieved scale precisely in a way that triggered the supplier response faster than the platform could mature. The Epics deal demonstrated that Netflix had the capital and the willingness to pay premium prices for content. This signal accelerated the studios’ recognition of streaming value, shortening the window during which Netflix could acquire content at below-market rates. By proving the model so conclusively, Netflix may have hastened the end of the arbitrage period that made the model viable. The success of the strategy contained the seeds of its own cost structure inflation.
In this light, the $800 million Epics deal was not merely an expensive content acquisition; it was an information revelation that damaged Netflix’s future negotiating position across all studios. Hastings was not just buying the MGM, Paramount, and Lionsgate libraries; he was publishing a price list that every other supplier would reference. The alternative, allowing a competitor to win the Epics deal, preserving Netflix’s negotiating leverage but sacrificing content depth, was strategically unpalatable. But the choice to pay the ransom accelerated the closure of the content window globally. Within three years of the Epics deal, Disney would begin developing its own streaming platform, eventually pulling its content from Netflix entirely. HBO would accelerate its standalone streaming plans. The studios that had seen Netflix pay $800 million for Epics understood that they could capture that value themselves.
The structural fragility, then, is that Netflix’s success at acquiring subscribers and demonstrating the streaming model simultaneously destroys the supplier environment that made that success possible. The company is running a race where the finish line moves further away with every step toward it. The only durable defense is to become the default platform, the “utility” of entertainment, before the content owners can build viable alternatives. But utility status requires ubiquity that depends on broadband providers who are hostile to Netflix’s existence, and content libraries that depend on suppliers who are learning to do without Netflix.
This is the economic essence of the streaming transition: not a simple technology shift, but a complex renegotiation of value capture in the video supply chain, conducted under time pressure created by the decline of the legacy business and the learning curve of suppliers. Netflix’s management during this period was not merely executing a digital strategy; they were arbitraging the time lag between when technology made streaming feasible and when market participants recognized its economic implications. The arbitrage was profitable for years, but it was always temporary. The question was never whether the window would close, but whether Netflix could build a fortress large enough to survive in the open air once it did.