Reed Hastings knew what he was doing when he started Netflix – and he’s still got it. Netflix was really the first-mover when it comes to making DVDs accessible and available within homes within 1 business day. Netflix can reach 90% of people within 1 day, and in the past months they’re reaching everyone via digital downloads/streaming. One of the challenges in the digital space has come from movie industries wanting people to still buy DVDs rather than just get them via Netflix. Working with Warner Bros, Netflix announced a partnership last month that they’ll stream movies for the first 28 days, and then ship DVDs; promoting people to buy the DVD instead of just renting it via Netflix. Brian Beckowski captures the thoughts of many with his words:
If there is one thing in my life that I would not trade, it is my Netflix subscription.
So, what’s the question to answer here? Not sure to be honest. Reed is doing great and my advice to him is – keep going. Keep pushing forward in the download options – reach out to more studios and get more videos available on demand. This is going to be a growing area as bandwidth and connectivity improves across the USA. Additionally, this allows Netflix to reach that 10% who aren’t able to get movies in 1 day with instant movies. Netflix being able to tap into the long tail should propel them forward with downloads that hit those non-top 10,000 videos. That will enable them to continue their reach into the random niche markets and build on their ability to leverage the market that gets neglected at BlockBuster or other movie stores.
I’d argue that Netflix business is in statistics and user recommendations. Their recommendation engine is the powerhouse that keeps them going and drives them forward. The announcement of the Netflix Prize made things even more exciting for customers, as recommendations will improve and the desire to rent even more movies will continue to grow.
Hey Matthew….thanks for the quote. I feel so special…..
Thanks for posting that information about the Netflix Prize. I was not aware that they were running a contest like this to improve on their rating system until I read your blog. Gotta love the way in which they use their consumers to improve the site. I saw that they are planning for a Netflix Prize 2 that is going to present a harder problem in a shorter time frame. Not sure when they are releasing the requirements for that one. It’ll be interesting to see what they focus on this time.
Do you know if Netflix plans to stream its NEW RELEASES for 28 days before taking them to DVD? That would be awesome, because sometimes I have to wait a month or two to get a new release on Blu-Ray. Plus, the play instant movies are usually 6 months to 1 year old at best. Even though the quality of Blu-Ray is better than streaming video right now, I can see that changing in the future with faster networks. Not sure what will happen when you can get the newest release on Blu-Ray quality through streaming video. Only reason to buy a DVD/Blu-Ray then would be if you really loved the movie and wanted to own it. Otherwise, I’d just stream it everytime I want to see it. Consumers would now have an infinite video library that didn’t need to take-up shelf space in their living rooms.
@Brian – My understanding is the Netflix plan is to stream for the first 28 days before sending out the discs. This is WB only right now, but I’m sure in the upcoming 3-5 months it’ll be extended to other movie houses.
@Matthew- This is a great idea. If there is a movie I really want to see and don’t want to wait for the Blu-Ray copy to arrive, I can stream it through my PS3 to my TV. I really think this is going to hurt physical DVD sales of new releases, even though it will only be available as a stream. As a person who does not buy DVD/Blu-Rays though…I love this.
I completely agree – Netflix has gotten it right. They have been pretty impressive in keeping up with a changing market. I also like your point about how they can now quickly reach that 10% of the market that is outside of their fastest distribution range. If one way is not working – find another – and that is exactly what Netflix has done in this case. And the great thing is, they simultaneously improved upon what WAS working as well.