The Future is Streaming

Last week, Netflix announced a new subscription plan that ushered in an increase in prices. If you were online for any period of time over the past several days you have likely heard this. After the announcement, Netflix saw a great deal of backlash across social media with those displeased about the changes.

On one hand, a 60% increase in price while offering no extended benefits is quite the change. On the other hand, starting online riots over a luxury item that is in no way a necessity is a bit much. This past week has proven just how much people like their movies, and if you want to get in the way of that you better be backed by a Spartan army.

If you would like to get a recap of sentiment surrounding Netflix’s announcement, head over to their Facebook page. The pricing change post currently has over 75,000 comments, most of which are negative.

The company’s customer service lines have been jam packed with subscribers calling to complain, and many who are outright canceling their service. I’m going to go out on a limb here and say I don’t think this was the reception that Netflix had planned for.

Whether or not this change in price is justifiable at all is one thing. However, an unarguable fact remains that Netflix could have done a much better job explaining the reasoning behind the increases. Instead, consumers were shot with a 60% increase in price bullet, while Netflix has done very little so far to heal the wound.

If I was the CEO of Netflix, I would have taken a cue from the past and approached things quite differently. I also wouldn’t have said that Americans are “self-absorbed”, but that’s old news.

Blockbuster is a perfect example of the path I believe Netflix is partially headed down. Blockbuster collapsed because of their narrow vision and inability to adapt. For whatever reason, they believed that brick-and-mortar stores could carry them into the future. This was obviously not the case.

I think this is the perfect time for Netflix to take a slight change in direction. The future is in streaming. Netflix is arguably the current streaming movie and TV show leader, but no one owns that space. Hulu Plus and Amazon both have somewhat comparable streaming services.

The time is right for Netflix to pump all they have into their streaming service. The most expensive aspect of this move would be licensing rights, which by no means would come cheap. In order to have a massive streaming library, Netflix would have to spend millions, and likely billions, on licensing. However, this would cut down on a ton of overhead. Netflix could sell off their physical DVD collection. They wouldn’t have to purchase storage space to house these DVDs. They would not spend the millions that they do on postage.

Redbox is to Netflix as Netflix is to Blockbuster. Several years ago, Netflix beat out Blockbuster in terms of convenience and price. Today, Redbox has Netflix beat on convenience and price. You can find a Redbox in most areas and get a DVD the same day without having to wait for it to come in the mail. With the new Netflix pricing of $16 for a combined streaming and DVD plan, you can watch 16 Redbox movies a month for the same price. I don’t have numbers on this, but I doubt the average Netflix user goes over this amount per month.

Of course Redbox has limitations, such as a scaled down DVD library, but I would say they have Netflix beat on price and convenience at this point.

If Netflix wants to continue at the top, now is the time to innovate. Innovation doesn’t come in the form of upsetting your fan base while giving back nothing in return.

My prediction for the future is that someone is going to come out on top in terms of video streaming in the next few years. That company is going to make a lot of money. This has already happened in the music world. When was the last time you purchased a physical CD?

So, Mr. Netflix CEO, Americans may be “self-absorbed”, but this one is trying to help you out.

I’m sure there are varying opinions on this topic, so I’d love to get your input and comments.

17. July 2011 by Alex Trevisan
Categories: Deep Thoughts, Technology, Video/Film/TV | Tags: , , , , | Leave a comment

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