Netflix and the House of Cards
Netflix has had an interesting history. It disrupted the market for movie rentals by introducing a better service. Instead of renting bulky video cassettes from physical stores (the old way),. Netflix rented DVD’s that you ordered via the internet and got by mail. Blockbuster et al, stuck in the old model have not recovered.
Then Netflix decided to go “all in” on the movie streaming business. It created the technology that allowed subscribers to stream video to their TV. And this has gone well — even though it got into difficulty when the company tried to move into that market too quickly via a new pricing model. Ooops
But the real growth problem that Netflix faces is that it buys rights to its content. It is hostage to the whims of Hollywood content sellers who can decide to raise prices pretty much at will.
So Netflix is going into the content creation business too. It is airing its first TV show - The House of Cards. NYT gives the show a good review today. If Netflix can get into content creation in a significant way, it can achieve two goals (1) it further enhances the value of its platform and (2) it gains leverage in how it obtains content.
Will this work? I think it will. BTW, Cringely thinks that the challenge might be less difficult than people think. If you buy out the content creators - the small shops that supply Hollywood with creative stuff, you can take over the creative industry.
Stay tuned.