4.3 NETFLIX

coopetition

Coopetition or frenemies is a situation where firms may both cooperate and compete with one another.

marginal costs

The costs associated with each additional unit produced.

bandwidth caps

A limit, imposed by the ISP (e.g., a cable or telephone company) on the total amount of traffic that a given subscriber can consume (usually per each billing period).

First Sale Doctrine

A US Supreme Court ruling stating that an individual who knowingly purchases a copy of a copyrighted work from the copyright holder receives the right to sell, display or otherwise dispose of that particular copy, notwithstanding the interests of the copyright owner.

decision fatigue

A phenomenon, akin to congestion effects for attention, where consumers avoid selection decisions with an overwhelming number of choices.

A/B test

A randomized group of experiments used to collect data and compare performance among two options studied (A and B). A/B testing is often used in refining the design of technology products, and A/B tests are particularly easy to run over the Internet on a firm's website. Amazon, Google, and Facebook are among the firms that aggressively leverage hundreds of A/B tests a year in order to improve their product offerings.

fixed costs

Costs that do not vary according to production volume.

windowing

Making content available to a given distribution channel (in theaters, through hospitality channels like hotels and airlines, on DVD, via pay-per-view, via pay cable, and later broadcast on commercial TV) for a specified time window, usually under a different revenue model.

disintermediation

Removing an organization from a firm's distribution channel. Disintermediation collapses the path between supplier and customer.

colocation facilities

Sometimes called "colos," or carrier hotels; provide a place where the gear from multiple firms can come together and where the peering of Internet traffic can take place. Equipment connecting in colos could be high-speed lines from ISPs, telecom lines from large private data centers, or even servers hosted in a colo to be closer to high-speed Internet connections.

binge-watching

Viewing several episodes of a program in a single sitting.

transfer pricing

the price paid when divisions of the same company transact with each other.