About 95% of Netflix traffic is served by Open Connect Appliances hosted by ISPs and at internet exchanges. The ISPs take on the cost of rack space, power and bandwidth. Each appliance probably costs NF somewhere from $40-100K depending on the version, an ISP can have from one to a few hundred appliances depending on number of customers and areas of service.

But let's look at the 2021 financials for Twitter and Netflix.

NF 2021 line items:

-- Cost of revenue $17,3B

-- Technology and development $2,3B

Twitter 2021 line items:

-- Cost of revenue $1,8B

-- Research and development $1,25B

__NF explanations__:

Cost of Revenues includes amortization of content assets makes up the majority of cost of revenues. Expenses directly associated with the acquisition, licensing and production of content (such as payroll and related personnel expenses, costs associated with obtaining rights to music included in our content, overall deals with talent, miscellaneous production related costs and participations and residuals), streaming delivery costs and other operations costs make up the remainder of cost of revenues. We have built our own global content delivery network (“Open Connect”) to help us efficiently stream a high volume of content to our members over the internet. Delivery expenses, therefore, include equipment costs related to Open Connect, payroll and related personnel expenses and all third-party costs, such as cloud computing costs, associated with delivering content over the internet. Other operations costs include customer service and payment processing fees, including those we pay to our integrated payment partners, as well as other costs directly incurred in making our content available to members.

Technology and development expenses consist primarily of payroll and related expenses for technology personnel responsible for making improvements to our service offerings, including testing, maintaining and modifying our user interface, our recommendations, merchandising and infrastructure. Technology and development expenses also include costs associated with general use computer hardware and software.

__Twitter explanations__:

Cost of revenue includes infrastructure costs, revenue share expenses, amortization of acquired intangible assets, amortization of capitalized laborcosts for internally developed software, allocated facilities costs, as well as traffic acquisition costs (TAC). Infrastructure costs consist primarily of data centercosts related to our co-located facilities, which include lease and hosting costs, related support and maintenance costs and energy and bandwidth costs, publiccloud hosting costs, as well as depreciation of servers and networking equipment; and personnel-related costs, including salaries, benefits and stock-basedcompensation, for our operations teams. TAC consists of costs we incur with third parties in connection with the sale to advertisers of our advertising productsthat we place on third-party publishers’ websites, and applications or other offerings collectively resulting from acquisitions. Certain elements of our cost ofrevenue are fixed and cannot be quickly reduced in the near term in response to market conditions.

Research and development expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation, for ourengineers and other employees engaged in the research and development of our products and services. In addition, research and development expensesinclude amortization of acquired intangible assets, allocated facilities costs, and other supporting overhead costs.

Twitter 2021 Annual Report: https://s22.q4cdn.com/826641620/files/doc_financials/2021/ar...

NF 2021 Annual Report: https://s22.q4cdn.com/959853165/files/doc_financials/2021/q4...