Wednesday, November 19

Removing Customers: They Don't Want You

Ever since Blu-Ray started selling 100 units for every 98.71 units of HD-DVD last year, the writing was on the wall. There was going to be change. And for some, change for the sake of change would be painful.

Earlier this year, Netflix sent some consumers in a tail spin after announcing that it will carry high definition videos in the Blu-Ray format backed by Sony and others, but not in the HD-DVD standard once backed by Toshiba. Today, in what appears to be a licensing deal gone temporarily wrong as opposed to an answer to Microsoft's Xbox Live campaign, the Xbox 360 will not stream Sony Columbia Pictures Films. (Sony Pictures Entertainment movies are still available.) Sony Columbia Pictures Films doesn't want Xbox 360 customers.

Did you get all that? Netflix didn't want Toshiba customers. Now, Sony Columbia Pictures doesn't want Netflix customers, at least not those using an Xbox 360. And, long term, it seems doubtful Netflix will want Blu-Ray customers because the adoption rate is less than stellar.

Sure, Netflix remains vigilant in communicating that the company's current business strategy is still firmly rooted in DVD technology, but most weeks it communicates a growing number of streaming deals. However, when you compare a few choice quotes from Netflix, they don't add up:

"There are 100 million DVD players in U.S. households. If you really think people are going to stop renting DVDs, you need to lie down until that thought passes.” — Barry McCarthy, CFO, Netflix.

"As watching instantly becomes a more prominent part of the Netflix service, our goal is to have all of our streaming content licensed for all of our partner devices. We're doing well in this area, but it will take some time before we fully achieve that goal." — Steve Swasey, vice president of corporate communications, Netflix.

More and more, it seems electronic companies keep asking consumers to replace hardware at a dizzying pace just so they can replace all their media content once again (just in time for the next new hardware) or, perhaps long term, only allow them to borrow content from time to time for a monthly subscription price model that made cable companies profitable.

So what are they really saying? Your children's children won't know what a DVD is (or Blu-Ray for that matter) and they might not know what a book is either. While we keep aiming to make content more portable, the side effect might be that content becomes increasingly controlled and temporary. That will be painful. But as mentioned, change for the sake of change is always painful.

Digg!

2 comments:

Bonnie Parrish-Kell said...

You're absolutely correct when you state that the technology changes so quickly. What we buy today for, say $100, is practically obsolete by the next -- that's what it feels like for me.

Given the frustration it causes for this consumer, I think I'll stick with reading books. The film versions rarely do them justice!

Rich on 11/20/08, 4:59 PM said...

Bonnie,

Before you know it, books will be gone too. You'll own the next generation of Kindle products and people will be fighting over the rights of which book will be on which reader. :)

I just wish they would communicate with honesty, especially amongst themselves because consumers want portable content AND compatibility.

Best,
Rich

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