3/4/14

3/4/14

Good morning, All,

A man walks into a video store…ok, it was 1997 and there really was a time when you walked into a video store, made your selection, rented it and had to return it in a day or two or face penalties. Reed Hastings rented Apollo 13, somehow neglected to return it for a while and incurred $40 in late fees, which he was forced to pay. DVDs had recently been introduced, so Hastings got together with his buddy Marc Randolph and launched NetFlix, sending out DVDs, almost literally for the price of a first-class stamp (although they charged $2 s/h, plus rental fee). They launched in April, 1998. In December 1999, they launched a subscription service (4 DVDs a month of $15.95 – no late fees or due dates, but you had to return a DVD to get a different title). They didn’t reach 500,000 subscribers until 2002 – but they did have a business model and forged partnerships with studios.

There were bumps in the road: not all of their products were successful (Qwikster) and there was a hue and cry when they announced that a bifurcated offering: one price for unlimited DVDs and another for unlimited streaming. NetFlix might not be a verb but let’s face it: it’s firmly entrenched in the zeitgeist as an entertainment delivery medium.

But NetFlix is more than an online ‘video store,’ to resurrect a quaint concept, not to mention the medium that inspired the company in the first place. It moved into distributing original content and received an Academy Award nomination this year. Not only did they outbid HBO and AMC for House of Cards: they’ve already surpassed many of the pay cable services in number of subscribers.

Our industry boasts two successful Reids: Hastings and LinkedIn’s Hoffman, both of whom found their respective niches – Hoffman by creating a social network focused on the business community and creating arguably the largest online database/network for that vertical. It might not be as large as Facebook, which is the online directory for the planet, but the company is wildly profitable. LinkedIn May Not Be The Coolest Social Network, But It’s Only Becoming More Valuable To Businesses. Also worth pointing out that unlike Facebook, which is somewhat reactive, the Reids tend to follow a logical progression. Facebook may pull its sudden surprises, and with Messenger now gone as of March 3rd, hard to believe that WhatsApp is going to remain as an independent platform in the long run.

Know your audience and give them what they want, not what you want or believe they’ll live with. The main differentiator is that FB is about still about the numbers (despite what we read about them seizing the mobile future – who isn’t?) and keeping its status while the Reids focus on enhancing their offerings. In other words, they’re about business. Not always a top of mind concept or easy to spot in this crazy online world, but then, we’re an industry often given to not seeing the forest through the Reids. Onward and forward.

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