I have never used Netflix and haven't been to a Blockbuster in years, so reading this case was truly a learning experience for me. What I knew about Netflix I had heard from a few very loyal users: that there were no late fees-you could keep your DVD for as long as you liked, you could keep up to 3 at one time, and you created a queue so that when you sent back a movie, the next one in your queue was sent automatically. I assumed Netflix catered to those looking to see new releases, and had no idea that Netflix had a reputation of being the "highest-quality source of independent films."
I was impressed by a few key actions that Netflix took that enabled them to be successful:
1) creating a proprietary algorithm that took into account the user's survey results to make appropriate movie recommendations, yet at the same time screening the results to prevent recommending a title that was out of stock.
2) Establishing a revenue-sharing agreements with major movie studios
3) Partnering with the USPS, often considered a money-loser, to put special processes into place that allowed Netflix to reach "90% of subscribers within one business day".
This upstream thinking was tantamount to Netflix's success.
Tuesday, February 9, 2010
Tuesday, February 2, 2010
Case #2: Warner Bros. and BitTorrent
When I started reading this case, I asked my fiance if he was familiar with BitTorrent. His response was, "Yes, that's what (friend who shall remain nameless) uses to download movies illegally."
BitTorrent certainly took the right approach to avoid illegal usage of its technology by partnering with MPAA and dilligently policing its site. But the fact of the matter is that if there is a way to get content for free, certain users will pursue it; regardless of whether or not it's legal.
Having seen the music industry earn their lesson the hard way, it's admirable that Warner Bros. attempted to stay ahead of the technological curve by entering into the agreement with BitTorrent. It will be interesting to see how sustainable this business model is, and if any other similar partnerships follow.
BitTorrent certainly took the right approach to avoid illegal usage of its technology by partnering with MPAA and dilligently policing its site. But the fact of the matter is that if there is a way to get content for free, certain users will pursue it; regardless of whether or not it's legal.
Having seen the music industry earn their lesson the hard way, it's admirable that Warner Bros. attempted to stay ahead of the technological curve by entering into the agreement with BitTorrent. It will be interesting to see how sustainable this business model is, and if any other similar partnerships follow.
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