Will Netflix be the next TiVo?

By | September 22, 2011

Like many in the entertainment business, Netflix, with its iconic red envelopes and game changing subscription model, is struggling with digital delivery. This is not a new problem…the old fashioned “record stores” (who by that point were selling CDs) cursed the advent of iTunes. And then video rental stores didn’t have much affection for Netflix, whose convenient, affordable approach caused significant disruption in their business.

It isn’t called a category killer for nothing…and what is good for the goose is good for the gander. Digital delivery, primarily from the providers, is threatening to dethrone Netflix, in much the same way that they unseated TiVo from its seat of power. It’s cheap, provides instant gratification, and eliminates the need for a DVD player at all. And while Netflix struggles for a solution, they face an issue that TiVo and others like them never did: the power of social media. Social media’s amplification of Netflix’s stumbles in strategy were exacerbated by some questionable choices in communications…which appeared rushed, poorly planned and perhaps the gravest error of all…inwardly focused emphasizing their CEO’s opinion, rather than customer focused.

It would be hard to believe that the decision to migrate Netflix customers to the Quikster brand and apply the Netflix brand to a different business was likely made carefully, and thoughtfully. Unfortunately, the communications cluster that followed made it look like a desperate, knee jerk reaction. And even if it were a quick decision, fast and well done aren’t mutually exclusive. We’ve been hired by clients the night before they file for Chapter 11, and still managed to communicate effectively. The difference is that those clients understood that communicating well is key to preserving stakeholder trust. This may be just the opportunity Amazon needed to capture the streaming video market



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