Videonuze

Altitude Digital - leaderboard image - 10-24-14
Friday, October 31, 2014

Recently on Videonuze

  • Netflix's Hastings Offers Frank Assessments in Today's WSJ

    Netflix and its CEO Reed Hastings are profiled in today's WSJ ("Netflix Boss Plots Life After the DVD"). Hastings offers a frank assessment of the where the DVD business stands, suggesting that as soon as four years from now DVDs-by-mail will start to decline. He notes however that DVDs will still be around in 20 years.

    The article underscores Netflix's challenges in obtaining Hollywood movies for its Watch Instantly service. This is no surprise given the strict "windowing" business model Hollywood employs, along with its desire to preserve its DVD revenues as long as possible. In fact, last November, in this post, I acknowledged this as an obstacle unlikely to be resolved any time soon, and instead recommended that Netflix beef up its network TV offerings. Doing so would have a lot of upside as a high-quality VOD service that would generate immediate revenues for broadcasters.

    The article also explores Netflix's aborted effort to build its own set-top box for its subscribers to receive streaming video. Hastings admits that he "fell in love with building boxes" in an attempt to emulate Apple's hardware-content delivery model. Eventually logic prevailed and practically on the eve of the box's launch Netflix pulled the plug and spun the project off to Roku, in which it made a $6M investment. While it was confusing to outsiders, it was the right move. Going into the box business seems like it would have been an example of "undisciplined pursuit of more," the second stage of the framework Jim Collins outlines in his new book, "How the Mighty Fall."

    Netflix has an interesting road ahead of it, as it tries to transform itself from a hugely successful DVD rent-by mail company to an online deliverer of digital media. Hastings sizes up Netflix's odds saying "Almost no companies succeed at what we're doing." Despite his sobering tone, it's encouraging that he understands the significance of the challenges ahead. The question I continue to have is whether Netflix will ultimately tackle these challenges independently or as part of a larger entity (VideoNuze readers will recall my final prediction for 2009 - that Microsoft will acquire Netflix). One way or another Netflix is going to be a key player for some time to come.

    What do you think? Post a comment now.

     
  • Akamai - full banner - 9-17-14