Is Netflix Like The Little Engine That Could?
Over at Slate I just finished reading an interesting article about Netflix. I have been a loyal customer of Netflix for many years and have watched as it has improved its service in all areas. Customer service is top-notch and delivery of its movies via mail is just about flawless. I live in an area where Netflix has its own service center and delivery or returns are completed in one business day. When I have had any issues with a bad DVD, Netflix has immediately sent a replacement, even before the damaged disk is returned. Streaming now offers a great alternative for those wish to watch older movies and shows.
In the article it stated the following:
In 2005, Michael Pachter, an analyst for Wedbush Morgan Securities, called Netflix “a worthless piece of crap with really nice people running it.” Today, that worthless piece of crap has a market capitalization of $6.4 billion. In early 2007, when Netflix first announced its plans to allow subscribers to stream videos instantly—rather than wait for DVDs to arrive in the mail—esteemed tech journalist Om Malik predicted that this move would “soon be relegated to the dustbin of failed ideas.” Netflix has more than doubled its subscriber base since then, and today nearly two-thirds of them use Netflix’s streaming video service.
While its critics were flailing away, the company has continued to grow steadily and spread its influence well beyond the red envelope. One of Netflix’s direct competitors, Blockbuster—which for years was supposed to put Netflix out of business—is teetering on the edge of bankruptcy. Netflix’s iPad app was widely deemed one of the best available when the device launched in April. And when Apple announced today that its new Apple TV service would stream movies and TV shows, Netflix content was front and center.
What is it about Netflix that causes critics to misread it so badly? Call it the innovator’s paradox: Netflix forged an identity by building a simple business—DVD delivery by mail—that had never been done before. The very fact that this DVD-by-mail idea connected so deeply with consumers led many observers to think that was all that Netflix could or would ever do. Instead, the DVD delivery service—while still vital to Netflix’s revenue—looks more like the Trojan horse of a much wider strategy designed to change how Americans watch filmed entertainment.
Netflix is one of those companies that I believe is under estimated and also under estimated. They will have to pry the DVD or Blu-ray disc from my dying hands before I give up using the service. Plus, I believe they offer real value for only $9 a month.
Comments welcome.
