retail news in context, analysis with attitude

The Los Angeles Times reports that “after building a successful business by shipping millions of DVDs every month in the mail, Netflix Inc. expects by the end of this year to start letting subscribers give up the shiny discs.

“In prepared remarks for a conference call discussing the company's strong third-quarter earnings, Chief Executive Reed Hastings said Netflix was looking to offer a new lower-cost plan through which subscribers could access movies and TV shows solely online ... Netflix will still offer users its current subscription plans, all of which include Internet streaming and DVDs through the mail.

“The move comes as Netflix for the first time will deliver more hours of content via the Internet than on DVDs. In addition, Netflix is now spending more on content for its streaming service than for discs.”
KC's View:
This is such an important example for all retailers to mimic. Think about it. Netflix became successful because it created a disruptive business model that managed, in fairly short order, to marginalize a company (Blockbuster) and a business model (video stores) that for a time seemed ubiquitous and forever.

But even as that happened, Netflix looked to the next disruptive technologies - downloading and streaming - to see what it needed to do next to remain relevant. There is no blind loyalty to its “traditional” way of doing business ... just adherence to the simple competitive principle that it is in the business of getting entertainment products into the hands of people, whatever the delivery system.

This is such an important lesson...but one, I fear, that too many retailers ignore.