Episode#51 – Netflixed

Netflixed

by Gina Keating

 

The book in one sentence

“Size and money alone did not guarantee success in the new world of digital delivery.”

 

My personal opinion

Actually I never thought about the story behind Netflix. When I started to use Netflix to watch a movie or a series from time to time I never thought about where the company was coming from. After I read recently various books about today’s famous businesses, e.g. the story behind Amazon, Google, Alibaba or Salesforce, just to name a few, I came across Gina Keating’s first book: Netflixed.

The story of the movie rental market, the history of Netflix and their biggest competitor Blockbuster, are researched and described in this book. You will find as well a lot of information about all this on the internet. Here I will only mention some of my highlights from this book.

Interesting are the insights how Netflix used data from their website to understand customer’s behaviour. This is more common sense today, but at that time and compared to the business models of the store-based competition, this was a critical advantage. Besides the data, they visited customers in person to even better understand their needs or to prove their hypothesis about customer behaviour. I think that the combination of digital measurement and real-world observations is an important methodology and it will help businesses to avoid making false assumptions about customer behaviour and needs.

Additionally, the story of Netflix and Blockbuster reminds me of the Innovator’s Dilemma by Clayton Christensen. With the market entry of Netflix and its new business model it showed the future of movie rentals. This was at that point in time a big challenge to identify and to deal with for Blockbuster. They earned good money offering movies the “old” way and didn’t want to cannibalise their own business. Several of similar stories are described in Christensen’s book.

At the end, Keating provides a summary why Netflix was able to win the fight of David against Goliath: “[…] Netflix had encouraged [its subscribers] to participate in creating a flawless interface between consumers and commerce, and people and technology. The fact that the company once listened set it apart from its rivals and accounted for much of its success against them.”

 

To whom I would recommend this book

I really like Gina Keating’s style of writing. For me, it was super entertaining to read and I think that I finished the 264 pages within a week. Since I knew Netflix only the way how it is today – as an online movie streaming service with a lot of high quality, self-produced content – the book provided some great hours of history. If you are a fan of such real-life business stories I can recommend you to go for this book!

On the other hand it is of course very interesting to read about how one of today’s most popular companies were build. To understand where the founders got their inspiration and business idea from, how they started, the challenges in the beginning and so forth.

As you can see below there are a lot of lessons learned in this book. If you are exploring a new idea yourself I would recommend you to get some additional motivation from this book. You’ll see, that the best team and the idea which fits best your customer’s need, have a good chance to become really, really big.

 

What I learned from this book

  • To achieve big results you have to overcome the ‘what ifs’ – the really big challenges. So big that most people are afraid to even start trying: “[…] when we solve all these ‘what ifs’ it will create such a high barrier to entry that there’s no way anybody else could solve this stuff, because it’s so hard to do.”
  • Build a team you can trust that they find their own ways of achieving a common goal.
  • Don’t wait for the “white knight” during tough times.
  • Create a channel to have an ongoing dialog between you and your customers. Get close to them as much as you can in order to get a first impression of what they need, how they are using your service or product…
  • “Bet the jockey, not the horse.”
  • If you going to test a new approach, make sure that you are aware under which circumstances you are testing. When Blockbuster evaluated the online rental business they made two mistakes: “[Their] test run of about one year was too short to pick up on the fact that a significant percentage of subscribers cycle in and out of their online subscriptions – quitting the service and coming back later in the year. Blockbuster counted these as straight cancellations and miscalculated the average revenue per subscriber, making the online business look less lucrative than it was.”
  • Word-of-mouth is a strong multiplier.
  • Focus on selling your own brand, not your competition’s (during an earnings call his team counted how often Hastings mentioned their competitor Blockbuster and how often he mentioned Netflix, which was more or less half of the number).
  • Don’t make the same mistakes twice (something wich I came across in lot of books actually).
  • As already mentioned in the Everything Store, Netflix was going for a self-enforcing circle when they decided to invest in their own productions: “better content meant more subscribers; more subscribers meant more money for content.”

Want to read this book?

Check it out on Amazon.com – Netflixed by Gina Keating

 

Publisher

Thanks to the publisher for printing such a great book!

Portfolio Penguin