A $120M spend on AWS is equivalent to around a $12M spend on Hetzner Dedicated (likely even less, the factor is 10-20x in my experience), so that would be 3% of their revenue from a single customer.
I'm not convinced.
I assume someone at Netflix has thought about this, because if that were true and as simple as you say, Netflix would simply just buy Hetzner.
I think there lots of reasons you could have this experience, and it still wouldn't be Netflix's experience.
For one, big applications tend to get discounts. A decade ago when I (the company I was working for) was paying Amazon a mere $0,2M a month and getting much better prices from my account manager than were posted on the website.
There are other reasons (mostly from my own experiences pricing/costing big applications, but also due to some exotic/unusual Amazon features I'm sure Netflix depends on) but this is probably big enough: Volume gets discounts, and at Netflix-size I would expect spectacular discounts.
I do not think we can estimate the factor better than 1.5-2x without a really good example/case-study of a company someplace in-between: How big are the companies you're thinking about? If they're not spending at least $5m a month I doubt the figures would be indicative of the kind of savings Netflix could expect.
When I used to compare to aws, only egress at list price costs as much as my whole infra hosting. All of it.
I would be very interested to understand why netflix does not go 3/4 route. I would speculate that they get more return from putting money in optimising costs for creating original content, rather than cloud bill.
I invest in Netflix, which means I'm giving them some fast cash to grow that business.
I'm not giving them cash so that they can have cash.
If they share a business plan that involves them having cash to do X, I wonder why they aren't just taking my cash to do X.
They know this. That's why on the investors calls they don't talk about "optimising costs" unless they're in trouble.
I understand self-hosting and self-building saves money in the long-long term, and so I do this in my own business, but I'm also not a public company constantly raising money.
> When I used to compare to aws, only egress at list price costs as much as my whole infra hosting. All of it.
I'm a mere 0,1% of your spend, and I get discounts.
You would not be paying "list price".
Netflix definitely would not be.
My point is that even if I get 20 times discount on egress its still nowhere close, since i have to buy everything else - compute, storage are more expensive, and even with 5-10x discounts from list price its not worth it.
(Our cloud bills are in the millions as well, I am familiar with what discounts we can get)