Netflix
Friday, September 12th, 2008Since for many families Friday is movie night I thought I’d talk about one of my favorite internet-enabled companies: Netflix. Netflix delivers movies to customers through the mail under ongoing subscription plans starting at just $10 a month for one movie at a time. There are no late fees meaning customers can keep movies as long as they like and return shipping is included with each movie delivery.
Like most folks I used to rent movies from the local video store but I found the process frustrating - but not for the reasons you might think. In terms of convenience the video store can’t be beat: my last two homes were less than a mile from at least 3 or 4 Blockbuster franchise locations. I don’t watch a lot of movies (maybe two or three a month) so the cost of renting videos wasn’t an issue - I’m paying about the same amount with my subscription plan. Availability at the big video rental chains was generally good, especially following the innovative video lease agreements pioneered by Rentrak in the 1990s. But I digress..
Nope, for me the issue has always been FINDING good movies at the video store. Like most folks I would cruise the outer wall for looking for new releases and often leave with nothing when I didn’t see any familiar titles. Finding specific movies was even more difficult - is Indiana Jones in the adventure or comedy section? And when would the newest Indiana Jones movie make the switch from the new releases wall to its proper category section? (it seemed some movies were new releases for more than a year).
The point of all this is to say that Netflix has revolutionized the way I find and rent movies (though the finding is the real killer app for me). Finding a particular film is as easy as using the search box on the site and sorting movies by highest rated (rather than alphabetical) is a great way to find new releases you may have overlooked. The recommendation functions at Netflix are even more revolutionary since each movie recommendation is based on what Netflix thinks I might like rather than on a pimple-faced teenage worker’s recommendation at Blockbuster.
Of course online video rentals will be (are) the next big thing but it doesn’t really matter. Netflix used the power of the internet to transform an industry using existing technology (mail, plastic DVDs) rather than wasting money on pioneering the next technology. Sure, streaming video technology is coming along and broadband penetration is finally at a point where this starts to makes sense - but today it’s a lot cheaper and easier to do that it would have been just a couple years ago. In the meantime Netflix has built a huge user base and honed its recommendation engine to work well no matter the delivery medium.
Sometimes entrepreneurs need to take short-cuts to get to the ultimate goal; other times existing technologies still haven’t been fully utilized and optimized. Either way, we’re talking opportunity - the fuel of entrepreneurial dreams!



