THE CABLE PIPELINE

How could a startup company like Netflix get into the Pay-TV business and revolutionize the customer home viewing experience? Blockbuster learned the hard way by not heeding the concept began by the innovative entrepreneur Reed Hastings, and consequently is closing a thousand stores. Started in 1997 as a video rental by- mail business, Netflix eventually expanded the mail rental concept and included the internet, when nobody else believed that consumers would want to rent movies over a young and unproven medium by using their credit cards.

 After both believing in and refining the business model, Netflix has become an industry power to be dealt with by, not only the Blockbusters, but the Pay-TV industry as well. Although Broadband Internet and Cable VoIP Phone report higher subscriber growth than Netflix (see chart below); it is not far behind and continues to grow.

Subscribers By Pay-TV Type – (in millions)

Subscriber growth End 2^nd Qtr from previous year

Source Silicon Alley Insider

So what does this all mean in terms of winning the consumer loyalty, confidence and referrals that most companies strive to achieve? The bottom line seems to be the ease, convenience and flexibility that customers experience when dealing with Netflix. If ordering by mail with a monthly subscription fee, most customers receive their next video within one day after returning their last DVD. Videos are ranked by Netflix so customers can judge how well a movie plays within their vast customer base, while subscribers put their preferences in queue and order accordingly. However, with the ability to download and watch movies on your PC, Netflix has expanded their flexibility with its customers, a point that should not be taken lightly.

 As the chart indicates Netflix is adding more customers than Telco TV, Digital Cable and Satellite TV, which should have rival company executives concerned. Competitors need to take these concepts (to heart); consumer flexibility, convenience and simplicity in their relationship with the Pay-TV customer experience. The business model does not need to be complex, overpriced, or hold the subscribers hostage to purchase additional offerings. In essence, the customer experience should be delivered as promised, conveniently, on-time, and be flexible enough to add innovation and new experiences into the model.