Netflix Not Dead: Don’t Disrupt the Disruptive Technology
Here’s the thing, when Netflix debuted in 1997, it was a
disruptive technology that began derailing companies like Blockbuster. Back then we CHEERED Netflix for being a
forward thinking, “customers come first” kind of company. Let’s face it the US Postal service never
appeared to work faster than when a little red envelope was at stake. Also in
1997, I had a dial-up internet connection, and if I wanted to record a
television show it had to be done on VIDEO TAPE! Shit…remember VHS?!
Lately Netflix has taken a lot of (unnecessary) heat, for in
essence, putting the disk out to pasture.
NETFLIX IS RIGHT to do that. The stockholders, who once praised Netflix
for being innovative, are now crucifying Netflix for disrupting their own
tech. It is ass backwards for us to praise
companies like Apple, and Lytro for bringing the future to us – then crapping
on Netflix for wanting to kill off a 25 year old technology.
The reaction to subscriber
loss at Netflix is completely disproportionate. This week it was reported that
Netflix lost 800,000 subscribers in the past quarter – roughly a drop of 4%. Likely
the drop is due to the flip flopping on subscription plans and the Quickster debacle.
Fine. Reasonable. What is disproportional, is the stock price – down from
$300 this past summer – to less than $80 this week. In my opinion this shows little understanding
on the part of market analysts – and a complete lack of vision the part of
investors.
Ding Dong… the Disk is Dead!
Much has changed over the past 15 years, most noticeably in
bandwidth and digital storage. Let’s
face it many cellphones with 3G or 4G get 10 or 20 times the bandwidth any dial
up connection ever got. The idea of streaming movies and music to your pocket
is FANTASTIC as a consumer, but scares the shit out of distributors and content
providers who have yet to grasp the new paradigm.
To get back on track Netflix has to STAY THE COURSE and
phase out disks. If they can provide a CLEAN, reliable user experience – then they
can GET MORE TITLES to stream. They have
larger battles ahead with Amazon and Google who never mailed out disks and are
doing fine with “streaming only”.
Although the biggest battle will be with content providers – movie studios,
cable networks, and telco companies that are doing everything they can keep
doing business the same way they have for decades.
Companies that failed to innovate (they listen to stock
holders rather than move forward) and are now dead or on life support: Palm/HP, Borders, Kodak, RIM/Blackberry,
Blockbuster, Tower Records, Kosmo, Gateway, Yahoo, MySpace, AOL, Sega, the list goes on….
- What other companies failed to innovate?
- What do you think the next move is for Netflix?
