The News: Netflix is breaking into two divisions, Netflix for stream and Qwikster for DVDs.
The Problem: An integrated service with a good DVD library and a bad streaming library now becomes a non-integrated service, one that looks like it will require going to two separate places to discover, watch, and order video.
4 Reasons Why Higher Ed Should Care About This Dumb Netflix Decision:
1. Even Smart People Get Tripped Up With Digital: Reed Hastings, Co-Founder and CEO of Netflix, is a smart guy. The fact that he could come up with something as dumb as making the Netflix experience so much worse by splintering the Netflix site, and using a ridiculous name like Qwikster, is a great demonstration of how easy it is to go wrong in a digital ecosystem. It will be interesting how Hastings and Netflix respond to the over 17,000 overwhelmingly negative and critical comments on the Netflix blog -- as I can't see how this strategy is at all defensible. Are they surprised by the reaction to the news? The lesson I take from this is to tread cautiously in making big announcements regarding digital distribution, and to make sure we are getting honest feedback before we make our own dumb digital moves.
2. Digital Content Business Models are Immature: The business reasons why Netflix is splitting off the streaming service are clear. DVDs will eventually die, and Netflix needs to push subscribers and dollars to the streaming service as quickly as possible to achieve critical mass of both content and revenue. Breaking out the streaming business may give them more leverage with content providers, as they can better price the service at the place where the demand for streaming content matches the willingness of the providers to supply this content. A similar argument holds for the DVD business. As Hastings points out, the streaming business is really quite different from the DVD business. What Hastings is missing is that from the customer perspective, it is all about the video. For us, Netflix is a video provider -- one that happens to provide videos in multiple ways on multiple platforms. In order to sustain a longterm business, Netflix is choosing to upset (and to cut services to) current customers. If Netflix can't get this right, it will be very difficult for colleges, universities, and academic libraries to come up with business models that work to provide our students and faculty with streaming academic content, available on multiple devices.
3. Mobile Digital Curricular / Academic Library Content Remains Problematic: I'll admit it. I want my academic library to provide books and video with the same convenience as Amazon and Netflix. I want my students to be able to watch any video we have in our collection on any mobile device they have, at any time (and I want the selection to be huge). Same goes for books. Not going to happen. Digital content, available on a range of mobile devices, either is not available or is priced at levels that make it impossible to contract for. The ongoing Netflix debacle simply reminds us how far away we are from the promise of separating (academic) content from its physical container.
4. An Example of How Not to Apologize: Hastings' apology starts out okay: "I messed up. I owe everyone an explanation." He is apologizing for how the big price increase announced in July was communicated. The problem is that he is not apologizing for the actual price increase, but for how it was messaged. The big problem with the price increase was that it raised everyone's price without providing any new benefits or services. The streaming library remains terrible, and has only gotten worse since the prices went up. It would have been more sincere to recognize this problem, and to decide to hold back on the price increase until they can make good on the promise of additional streaming content coming in the next few months. The apology treated all of us who were upset with the price increase as idiots, unable to separate style from substance. If you are going to apologize, be prepared to back this apology up with actions. Otherwise, apologies come across as empty PR.
Are you working the ongoing Netflix case into any of your courses?
Will you become a Qwikster subscriber, or drop one or both of the services?