While the cable companies may not be directly involved here, they should be really worried about deals like this. These types of deals will keep coming, and over time, the value of cable television service will continue to fall.
I just wonder how long it will be until HBO goes direct? That is, how long until you can buy it for a monthly fee without needing cable service at all? Because I’ll sign up in a second when that happens. And I bet it will happen soon.
Netflix CEO Reed Hastings first apologizes for a lack of communication, and then gives his thoughts about the recent price changes and separation of DVDs and streaming (which is still the right move, as Hastings reiterates).
The wording is good. Amazingly, it doesn’t sound like the total bullshit you usually read in such posts. But here’s my favorite part:
For the past five years, my greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us) because they are afraid to hurt their initial business.
When I read this, I have one larger thought than Hastings: Microsoft.
Why is legacy Windows and all its baggage a part of Windows 8? Because of Hastings’ last sentence above.
He continues:
Eventually these companies realize their error of not focusing enough on the new thing, and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.
We see this time and time again. Complacency. These thoughts are nothing new. But what’s great is Netflix’s gumption to execute — stupid name or not.
Also great: Hastings is on Microsoft’s board. There is still hope.
If you haven’t watched yet, now you have no excuse. Seasons 1 through 3 are available (season 4, the current one, is not yet). This is going to kill a lot of productivity.
“Blockbuster sent me a release about its offer to “rescue” unhappy Netflix customers with a DVD rental plan that costs $2 more than Netflix’s one-DVD one (albeit with some extra benefits). It sort of comes off like the Hindenburg offering to rescue passengers who find Pan Am’s ticket prices to be too high.”
This was both inevitable and makes sense. While Netflix seems surprised by continued demand for DVDs, they also know that this will die over time. And whether they’ll admit it or not, this move will further help facilitate that demise.
The future is streaming, not physical media.
I do like how Netflix is very upfront and clear about the pricing changes. What was previously $9.99 (DVDs plus Streaming) will now be $15.98 (DVDs and Streaming as two separate plans).
That’s a big hike. But again, inevitable, and the right thing to do from a business perspective.
While I’m clearly all for this idea (and I do continue to believe that Apple will eventually enter this market), I think a prediction of for this year sounds way too aggressive and optimistic.
And wait, did I read “team up with a major OEM”? Yeah…
From my understanding, Apple has been pleasantly surprised by the revamped, $99 Apple TV’s reception. And I think they’re going to explore some more things there first. Things like allowing apps to beam from iPhone/iPad to the Apple TV.
The most interesting thing to me in this article is the following quote:
“blow Netflix and all those other guys away”
Of the online video models out there right now, I do believe that Netflix is the one that most intrigues Apple. And when something intrigues them…
But wait. Netflix is already on the Apple TV and iPads/iPhones/etc. Ah, true! Keep your friends close and your enemies closer.
