Netflixification

Of course you know about Netflix, the subscription based service that for several years has kept American mailboxes stuffed with the latest feature film and TV program DVDs.  For most of its history Netflix focused on that 'hard media' delivery model. Users registered with the site, agreed to a relatively small monthly fee, set up their viewing preferences, and voila, DVDs would begin to appear in the post. Take a day, take ten days, watch the DVD as you like, mail it back in a pre-paid envelope and in a day or so the next choice on your list would arrive.Crap - but you realized it too late

Millions of DVDs going back and forth via the mail, lots of paper and energy used up in the selection, distribution, and return process, but still for most Netflix subscribers a major improvement from a trip to the local Blockbuster shop to peruse the latest DVD releases arrayed along the walls, while sneaking glances into the 'adult' section in the corner to see if anyone you recognize had skulked in for a look. 

Recently Netflix launched additional capabilities or enhancements to its delivery model - namely the ability to stream Netflix supplied content directly to a multitude of platforms from gaming devices (Wii, XBOX), to personal computers, and even handheld devices like the iPad and iPhone.  Not only do users avoid the drive to the local store, now they can skip the process stuffing envelopes and returning DVDs via the mail. Happily for some, the need for any actual human contact is eliminated.

Owning, or even renting 'stuff' is often a hassle. It takes effort, the stuff takes up space, costs are higher, maintenance is required, and perhaps most importantly owning something is often a limiting experience.  Buy that flash new car, and sure, you get to tool around in the ride and kid yourself that you look sharp, but unless you are really well off or are willing to endure some significant transaction costs, you have always given up the chance to own, or at least use the hundreds of other flash cars that you didn't choose. If 'using' cars could be made as frictionless as streaming Netflix video would anyone keep the same car for four or five years?

Beyond the sort of obvious end user advantages of streaming, and past the cost savings of from the elimination of packaging and shipping for Netflix, the newer streaming model represents as close to an optimal delivery model for the consumer. Instant access, on your choice of a wide range of devices that at least one of which you likely already own, and with almost completed elimination of the opportunity cost of a bad decision.  

It really sucked when you went to the video rental store, spent a half hour evaluating hundreds of options before finally selecting something from the 'foreign' section in a pathetic attempt to impress the store clerk with your depth, then getting home and realizing that 'Like Water for Chocolate' should have been called 'Like $2.95 for Crap', and having your evening ruined.

Netflix has it right I think, reducing the penalty for making a bad decision, or at least having a change of heart might be as important as delivering a great product/service/experience.  

I think in the future whether it is enterprise technology, consumer technology, or even lightweight goods and services, the providers that don't compel you to 'lock in' and that make changing course, adapting, expanding, or even shrinking as painless as hitting the 'delete' button on a streamed video will have a tremendous advantage over those with a variety of multi-year contracts, heavy infrastructure requirements, and high switching costs.

It is not a 'good deal' if I can't ever walk away from it.