QuickNetSter.com
I got the strangest email the other day - it was a very "personalized" email from the president of Netflix. Huh? Needless to say, I had to read on. The gist of it was this: Netflix had changed the terms of its deal without giving its customers a lot of heads up.
Well, so what, thinks I? Companies do that all the time. (Truth be told, I'm still not exactly sure why people reacted so vehemently to the new arrangement.) But here's the essence of the deal:
Once upon a time, there were small operators who rented video tapes of movies. For an exorbitant price, you got the privilege of having a not-so-new movie in your hands for a few days. (Remember Friday nights at Mom and Pop video, waiting in line to grab the latest release VHS? And you had to have it back in ON TIME or you'd be charged late fees?)
The only competition in those days was HBO or other "premium" movie channels on cable. Generally, it was a toss-up who'd get the video first, though usually it was the rental centers - more income to the producers.
Then Blockbuster and its ilk moved in, renting videos (eventually DVDs) for much less and having far less stringent return demands - their inventory was significantly higher since they bought in bulk, and Mom and Pop Movies couldn't compete.
Cable, which of course always had the capacity (fiberoptics) to send/receive huge amounts of data, was bit by bit moving this capacity from road to house to set-top, and eventually, it was practical to deliver movies "On Demand" to customers. What's the point of driving to a store, trying to locate a movie, checking it out, hoping it's not scratched or otherwise unplayable, and then having to return it, when all you really have to do is "demand" it from your cable provider?
And then there was Netflix, which offered content through the mails. Why visit Blockbuster when you could "queue up" movies in a personalized list, and be sent the latest three available for a flat rate per month, keeping the movie as long as it pleased you, with no need to visit the store, and the convenience of shopping for titles online?
Soon, however, even the mail to you - mail back convenience seemed like a chore when you could simply "stream" the content! Now all you have to do is sign up, list the movies you want to see, then the view them at your convenience via your computer? The only drawback was that content providers - ultimately, the studios - would hold back the DVD rental release of a movie until it had grabbed and squeezed every nickle it possibly could from every other source. That meant that a movie could be purchased before it could be rented before it could be streamed.
Netflix provided both hard copy rental (DVD) and streamed content to subscribers.
Subscribers were allowed to sign up for a variety of plans but the basic idea was that you were able to have in your possession a certain number of DVDs (for basically an unlimited period of time) at a given time, and you were able to stream (usually older content) content at will at the same time.
At some point, Netfilix decided to go to a two tier system - essentially, making people do business with two entirely different providers, paying a fee to each, and negotiating that fee separately - without really sharing this new business model with subscribers.
So where I had had the arrangement that I could have three movies on hard copy (DVD) at any given time, and stream whatever content was available for streaming during that same time period at will, I now had to make separate arrangements, and pay separate charges to separate companies.
Needless to say, people reacted - shall we say, negatively?
A basic rule of marketing is: you can add services and charge more; you can charge more to new customers; you can ever-so-slightly reduce the service for the fee paid, but never, never, never can you give the customer less than he or she has signed up for without a darn good reason.
All in all, Netflix broke the rules.
Netflix is now Netflix and Quickster. Quickster is the DVD rental center; Netflix is the streaming service. They are not connected, and when you pay for one, you are not paying for the other.
Is it the end of the world? Of course not. But it is a breach of marketing etiquette, and given the options for content delivery that are constantly popping up on the Internet, not the smartest move an Internet-based content provider has made in recent years.
And it still remains one of the stranger email apologies I've received, and one I'll probably hang onto as an example of...something... down the road!
Well, so what, thinks I? Companies do that all the time. (Truth be told, I'm still not exactly sure why people reacted so vehemently to the new arrangement.) But here's the essence of the deal:
Once upon a time, there were small operators who rented video tapes of movies. For an exorbitant price, you got the privilege of having a not-so-new movie in your hands for a few days. (Remember Friday nights at Mom and Pop video, waiting in line to grab the latest release VHS? And you had to have it back in ON TIME or you'd be charged late fees?)
The only competition in those days was HBO or other "premium" movie channels on cable. Generally, it was a toss-up who'd get the video first, though usually it was the rental centers - more income to the producers.
Then Blockbuster and its ilk moved in, renting videos (eventually DVDs) for much less and having far less stringent return demands - their inventory was significantly higher since they bought in bulk, and Mom and Pop Movies couldn't compete.
Cable, which of course always had the capacity (fiberoptics) to send/receive huge amounts of data, was bit by bit moving this capacity from road to house to set-top, and eventually, it was practical to deliver movies "On Demand" to customers. What's the point of driving to a store, trying to locate a movie, checking it out, hoping it's not scratched or otherwise unplayable, and then having to return it, when all you really have to do is "demand" it from your cable provider?
And then there was Netflix, which offered content through the mails. Why visit Blockbuster when you could "queue up" movies in a personalized list, and be sent the latest three available for a flat rate per month, keeping the movie as long as it pleased you, with no need to visit the store, and the convenience of shopping for titles online?
Soon, however, even the mail to you - mail back convenience seemed like a chore when you could simply "stream" the content! Now all you have to do is sign up, list the movies you want to see, then the view them at your convenience via your computer? The only drawback was that content providers - ultimately, the studios - would hold back the DVD rental release of a movie until it had grabbed and squeezed every nickle it possibly could from every other source. That meant that a movie could be purchased before it could be rented before it could be streamed.
Netflix provided both hard copy rental (DVD) and streamed content to subscribers.
Subscribers were allowed to sign up for a variety of plans but the basic idea was that you were able to have in your possession a certain number of DVDs (for basically an unlimited period of time) at a given time, and you were able to stream (usually older content) content at will at the same time.
At some point, Netfilix decided to go to a two tier system - essentially, making people do business with two entirely different providers, paying a fee to each, and negotiating that fee separately - without really sharing this new business model with subscribers.
So where I had had the arrangement that I could have three movies on hard copy (DVD) at any given time, and stream whatever content was available for streaming during that same time period at will, I now had to make separate arrangements, and pay separate charges to separate companies.
Needless to say, people reacted - shall we say, negatively?
A basic rule of marketing is: you can add services and charge more; you can charge more to new customers; you can ever-so-slightly reduce the service for the fee paid, but never, never, never can you give the customer less than he or she has signed up for without a darn good reason.
All in all, Netflix broke the rules.
Netflix is now Netflix and Quickster. Quickster is the DVD rental center; Netflix is the streaming service. They are not connected, and when you pay for one, you are not paying for the other.
Is it the end of the world? Of course not. But it is a breach of marketing etiquette, and given the options for content delivery that are constantly popping up on the Internet, not the smartest move an Internet-based content provider has made in recent years.
And it still remains one of the stranger email apologies I've received, and one I'll probably hang onto as an example of...something... down the road!
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