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Netflix's Qwikster Reversal and Higher Ed: 3 Lessons
October 11, 2011 - 9:45pm

The news from Neftlix CEO Reed Hastings "no change: one website, one account, one password … in other words, no Qwikster."

In jettisoning the plan to create two separate (and non-communicating) sites for streaming and DVDs, Netflix has made its first smart move in many months.

What can we learn in higher ed from this Qwikster debacle and Netflix's reversal?

Lesson 1 - Admit (Quickly) When Your Are Wrong:

Hastings should be commended for reversing course. Mistakes, even big makes, are inevitable - the damage comes when we are too stubborn to admit when we are wrong. Will we be as quick as Hastings to admit when we are wrong?

Lesson 2 - Digital Economics Are Poorly Understood:

The fact that Netflix has made such a hash out of the transition from shipping DVDs to streaming content is indicative of how difficult it is to find where demand and supply meet in the digital content marketplace. There is some price point where it is worthwhile for content producers to offer the content they produce on digital platforms such as Netflix streaming, we just don't know what that price is. Nor do we understand if this price point will drive demand?

The content that we work with in higher ed offers some parallels to Netflix's entertainment content. The DVD disc, the DVD sleeve, the warehouse, the post-office … all physical envelopes and packages and transporters for the content. None of which adds much value, all of which add a great deal of costs.

In higher ed the packaging, the campus and lecture hall, does add value to the course content and the credential. Learning, unlike video watching, is social. Yet, traditional higher ed (like Netflix) must figure out ways to take costs out of the packaging in order to spend more dollars on creating the content (teaching and learning). Netflix needs to free up dollars from shipping and warehousing to pay for content licensing deals. Higher ed needs to figure out a way to lower costs so we can lower tuition and invest more resources in the learning experience.

Lesson 3 - We Will Make Similar Mistakes:

Netflix started to stumble when they moved from streaming as an "add-on" to their traditional business to streaming as a platform to re-invent their core business. The fact that Netflix has done this poorly should not obscure the fact that Netflix must accomplish this re-invention. Netflix must move from a physical goods and delivery company (DVDs, warehouses, etc.), to an information and services company. Netflix needs to make the transition to digital before someone else, like Amazon or Apple or Hulu or someone else, figures this out.

We are also at the point where some players are trying to utilize technology to fundamentally re-invent and re-engineer higher education. We know how to bolt technology on to our traditional campuses, degrees, and courses. But what mistakes will we make when we follow Netflix's path, and try to fundamentally change our business while serving our existing students, faculty, staff and alumni? Our imperative for change is not any less pressing than that felt by Netflix. I can guarantee you that we will make equally big mistakes.


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