Symonds Says

Something happens once it’s an occurrence; twice it’s a coincidence. But if it happens a third time, you have to start paying attention. Three times in the past week I was confronted with the phenomenon of Netflix, twice in conversations with friends and once in a New York Times story. In the first two cases, my friends went on about how delighted they were with Netflix. And in the case of the Times piece, former food critic Bill Grimes wrote what amounted to a love letter to the subscription video service. For those of you unfamiliar with Netflix, I did some research. For a recurring fee of around $20 you receive a password. This allows you to log on to the Netflix site and select as many DVDs as you wish. This list becomes your personal queue. You are then sent, by mail, your first three discs. When you’re done with any one DVD, you simply stick it in the provided postage-paid envelope and return it. Upon receipt, Netflix will send you the next disc in your queue, which should arrive in two or three days. There are no late charges and you may keep any DVD as long as you wish, or as long as you pay $20 a month. What I find fascinating is that, in an age when technology has us communicating and entertaining each other across the globe in nanoseconds, the hottest idea to come down the pike since home video uses the U.S. Postal Service as its linchpin. I also find it incredible that, according to my friends (and especially in the Times’ story), the greatest satisfaction in Netflix comes, not from watching current releases, but long-forgotten or never-seen films. Grimes led his story with an anecdote about how he and his wife put together their own personal film festival featuring the work of an unknown Italian director who specializes in cheesy horror movies. My friends said very much the same thing: that they watch movies they had always wanted to rent, but didn’t, and that they take chances on movies they never would have bought on pay per view or at the video store. This flies in the face of everything the retail video industry believes. Blockbuster can’t give away its older or marginal titles, and cable operators will tell you that any pay per view title that’s been on the shelf for more than 60 days is just wasting bandwidth. The key is that the user is not really "renting," and therefore has no significant money or emotion invested in any one film. If it’s not good, he sends it back. There’s no additional cost and no buyer’s remorse. That’s the beauty of subscription video. (OK, recurring revenue is the real beauty of subscription video, but that’s not the point here.) Look, the Netflix story is one this industry should study like case law. We’re on the precipice of mass deployment of DVRs, VOD and SVOD, and the lessons it could teach us might be staggering. What Netflix built around the U.S. Mail, we should be able to construct in a digital world. But what concerns me is that, rather than challenging accepted wisdom, we won’t be bold in our thinking. Rather than blowing up the pay per view model and starting over, we’ll try to modify it. I urge anyone testing VOD and PVRs to consider why Netflix is so hot. And please keep in mind that, as amazing as digital technology is, we’re where we are today because of the content we deliver. People don’t care about bandwidth or bytes. They care about stories, and information, and being able to connect with one another. And Symonds says, perhaps more so than you’d ever believe possible, they care about cheesy Italian horror movies. Curtis Symonds can be reached at [email protected].