Tuesday, January 04, 2011

Netflix - Innovation and making it look easy

Netflix is one of the top stocks for 2010. However, I do remember being part of the service way back in 2001 or so. I traveled a lot for work at the time, and thought it would be nice to have movies waiting in the mail for me when I got back. On the plus side, the movies were not due back at any specific time.

Fast forward about 10 years, and look at the changes. There are very few brick and mortar rental places left, and Blockbuster went bankrupt. Recently we obtained a Boxee Box from D-Link and again, this could be another game changer as it almost seems that it could replace the cable box for us.

The founder of Netflix is an interesting guy, he spent time in the peace corps and as a programmer. The most interesting things I think he brings to the table are vision, and innovation. He really was ahead of his time, and I do not think he had this in mind when he founded Netflix. At the time, the value proposition was no late fees and a reasonable price to rent movies.

The only real problem that needs to be overcome now is that Netflix delivers its content over the internet, which is fine until you get about to the last 100 yards to the home. Now, the cable companies want a piece of the action, because Netflix is taking up bandwidth and of course revenue from movie rentals and people having less use for the set top boxes. It should be an interesting battle, hopefully the best technology and innovator wins.

Read though the article, it gives you some good insight into the leadership style and thinking of this key innovator.