The Verge has a piece about how over the past two years, Netflix has dealt with concerns about a loss of subscribers by making changes that took it away from its original business model.
Netflix was a company that used to encourage password sharing, but it has cracked down on the practice, which led to a surge in subscriptions. Netflix used to resist the notion that it should have a cheaper ad-supported tier, but when it reversed that decision and offered one, it “garnered 5 million subscribers in just six months.” In addition to that subscription revenue, Netflix now is making money by selling advertising.
And, while Netflix traditionally eschewed the notion of carrying live events, it has begun doing that as well – the most recent being its $5 billion deal to carry WWE Monday Night Raw.
Here’s the business lesson, according to The Verge:
“Netflix is no longer synonymous with streaming partly because it’s not the only game in town anymore. But even the Netflix that exists today is a far cry from what it once was, and it’s bound to keep pushing further away from that original vision.
That ideal of a streamer was buoyed by an ever-rising stock price, which has since come back down to reality. As for what that future means for streaming — whether it will soon become a mixture of live and on-demand content with ads — one thing is clear: Netflix’s rapid evolution is allowing the company to stay ahead in a more competitive industry than ever, and there’s no turning back from here.”
KC’s View:
Here’s why I think this story is both important and applicable:
Nobody is the “only game in town” anymore. Which means that everybody has to be willing to examine their business models, separate the core value from the stuff that has just been around for a long time, and compete aggressively and effectively.
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