Jul 16, 2012

Lessons From Netflix

While it’s a given that Netflix’s runaway success as an online streaming service took everyone (including Reed Hastings) by surprise, I’d like to offer up a few reasons why consumers are so enamored of Netflix.

First off, it just works. The UI is very well designed and has a real indie film theater vibe. Recommendations are sorted by quirky categories, but there are enough of them that it works as both a discovery engine (when I have no idea what I want to watch) and as a recommendation engine (when I do.)  It’s easy to search for movies and TV shows, and just as easy to watch them.

That may not seem like such a big deal at first, but the fact that there’s no Buy or Rent option, no HD or SD choice, makes the whole experience feel more like watching a cable channel than watching VOD. And if you’ve ever had to wade through the VOD offerings of the typical MVPD,  you’ll appreciate why a well done UI is so important.

Netflix also seems to have fewer fails than VOD services, less movies that don’t play correctly, cut out halfway through, buffer, buffer some more, etc. and so forth.

It also doesn’t have rights issues.

One of the most frustrating things about renting from iTunes and the cable VOD services is that you have a small (24 or 48-hour) window to watch the movie before your rental expires. I can’t tell you how many times I have started to watch something, fallen asleep or otherwise been distracted and then had to re-rent it because I did not have time to finish watching the next night. Netflix all-you-can-eat service might not get the most recent movies, but it lets me watch them whenever I want, as many times as I want– the latter being an especially crucial factor for anyone with small children, for whom 300 viewings of the same program is about average.

There are definitely some lessons to be learned from this: For content that doesn’t fall under the “gotta see it now” umbrella (and that sort of content is proving to be far more popular than expected) a one-price, all-you-can-watch system has a lot of merit.  It feels much more like watching a supercharged DVR than an add-on pay service, and in fact helps viewers to forget that they are actually paying for the privilege.  (Any TV-watching service that manages to get viewers to forget that they are paying for a service– like burying the cost of set top boxes in the overall bill– is a good thing.)

The second is that simplicity is always a virtue. A system that reduces the number of choices I have to make, around terms I don’t fully understand, is always going to win out.

Bill Clinton was on to something.

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