Intro: Investors are cheering on Netflix, as it moves from DVDs to streaming video and keeps adding customers along the way. But “digital” doesn’t equal “cheap” for Reed Hastings’s company. In fact, the online move has cost Netflix at least $1.2 billion.
Key point: The magic of the Netflix Web model, though, is that as people consume more on the Web, they cut back on discs –”You’re replacing the postal cost with content cost,” in Hastings’s words.
My take: Very interesting that companies now have to pay (at this stage of video through connected devices life cycle) for content. And can switch this cost from postal sending and plastic burning to content copyright! It proves my point for DiCoDE – the present: regulation is really striking back! But i believe further down the road, as Gerd Leonhard keeps on saying, content will be commoditized and value should be given through another way. My bet for DiCoDE – the future is service and experience…
Links: http://mediamemo.allthingsd.com/20101027/those-bits-arent-free-netflix-could-be-racking-up-a-2-billion-content-tab/?mod=ATD_iphone and http://ir.netflix.com/common/download/download.cfm?companyid=NFLX&fileid=411536&filekey=8fa5f7bd-fa84-426a-9634-704631dff7f2&filename=3Q_10_Earnings_Call_Q_A_Transcript.pdf