Bandwidth is perhaps cheaper than you suspect.
I worked for a regional ISP that serves about 50.000 subscribers. We had multiple 10 Gigabit Ethernet connections to various peering points, one of which happens to be where Netflix peered with us. Total cost for that peerage: the cost of the extra fiber capacity, plus engineering the peer.
As opposed to housing Netflix servers at our data center. First off, to service that many potential streams might require a few boxes and a not insignificant storage array. We actually did have a similar arrangement with another very large content provider: their stuff took about a half-rack. It then needs to be added to network monitoring, and you need to train your NOC staff what to do when that little red light comes on. And the equipment will fail: the "other content providers" equipment had a MTBF of a couple of months. The hard drives will take a pounding.
And we were small enough that when we asked Netflix to co-locate in our data center for free they actually said "Not interested."