Escrito el 4 Octubre 2006 por Ricardo Pérez Garrido en Entertainment

What do you need to make films a success, even when they don’t make it to the theatres? Well, a group of people interested in, yes, that simple, watching films. If you can give them a place to gather and exchange information about what they love, you are in good shape. Some tried: the videoclubs where a good place to do that, but then you have the problem of scalability and time (the amount of time your client has to drive to your location compared with other alternative ways in which he can get the same content)
The problem comes when you try to go big, and get revenues from something different that blockbusters. In this case, what you need is an easy, intuitive way to show that community of users what they have decided you will like if you loved, say, Four Weddings and a Funeral. It sounds familiar. Amazon.com does that for books, and it works quite well if you look at their numbers.
But the best at this game has been Netflix, a company that will send you DVD’s to your home via traditional mail, not using broadband internet or anything similar. The business is easy: I will let my customers build upon a powerful recommendation system, which is my key asset. They do a good job promoting titles that are not mainstream
Returning to Amazon, they just opened a new store, this time to sell videos,with TV series an hollywood blockbusters as the stars. As Rayport and Sviokla proposed ages ago (1995), there is a space for digital goods if you find the way to manage information in its value chain being innovative… The examples that inmediatly come to mind are the Netflix of their respective industries. Can Amazon replicate its success with books, or is it too late for them?, and for netflix?: now that we know how to buy stuff online, we don’t care where we do it, its just another sales channel and we will use the brand that connects to us, or the one that gives better service for the price -remember that Wal-Mart is now a partner of Netflix…
In any case, seems that the $1 million that Netflix is offering for the improvement of their search algorithm is oriented to sustain and improve the advantage they have now: now your customer better that the others. In te same arena Apple, Google, Microsoft, Yahoo, all the content producers… A first lesson could be that you only need creativity, a good look at what your customer wants, and some risk to find new business models, even in those industries where the crisis has been officially declared.


Amhed Herrera 5 Octubre 2006 - 00:49

I think that we’re starting to shift the TV-watching paradigm. Both Netflix and Apple are pursuing similar services like the one Amazon just launched. Apple started selling movies, TV chapters and others through their iTunes store. The only difference here is that Apple is selling a relative small and cheap device called iTV that will render the videos directly to your TV set using a wifi connection (about US$60 compared to more than US$1,000 for a Media Center PC that clogs up the living room).

Imagine TV ads aimed at specific users according to their preferences and TV-watching history. The days of yore when we had to channel surf until we can find something we’ll like are coming to an end.

Ricardo 5 Octubre 2006 - 19:20

I agree with the general idea: the value will be, again, in knowing what the customer whats and offering it at a reasonable price. The problem with the industry is that some of the products apparently are generated with a complete lack of understanding of what the customer really wants. I mean, products are created by companies, and the history of those companies is the real precedent of those products, not what the clients might ever want from them.

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