
Netflix and the Conservation of Attractive Profits - prostoalex
https://stratechery.com/2015/netflix-and-the-conservation-of-attractive-profits/
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creamyhorror
I'm not sure I fully agree with the writer's assessment of how Netflix, Airbnb
& Uber modularize/commoditize a different part of their respective value
chains in order to compete with incumbents. My initial thoughts:

\- Do taxis really modularize payment while Uber integrates it? Why is there
an additional value capture for Uber in this part of the chain? Taxi drivers
have to pay taxi companies heavy rent anyway - which is equivalent to Uber
taking a large cut of revenue.

\- Do hotels modularize reservations while Airbnb integrates them? I think
it's arguable that Airbnb is banking on its differentiated offering (homes vs
hotel rooms) and lower prices to attract customers to its "integrated"
reservation system. But hotel chains have "integrated" reservations too - they
just also choose to distribute rooms through other channels (and Airbnb
probably does as well).

\- The Christensen hypothesis that profits lie in some uncommoditized part of
the value chain looks like a bit of a truism - some part of the chain has to
offer some supernormal profits, otherwise it wouldn't be much of an industry
to run a business in. (And there are probably exceptions: industries massive
enough that virtually every part is commoditized.)

That said, as an Econ/Business major, I appreciated his analysis. I'd like to
hear thoughts from the rest of you.

------
nocarrier
This was a fun read. Stuff I found interesting:

1\. The shift from cheaply produced, low quality content, to higher quality
"must see" shows. It is definitely the must see shows that have drawn me to
HBO and Netflix. I don't just randomly watch whatever's on HBO--I have it for
Game of Thrones, Silicon Valley, etc.

My use of Netflix is a little more dual-purpose though; there's certainly
Netflix-produced shows that I like a lot, but I often find myself
nostalgically surfing Netflix to watch old shows like ST:TNG, or to watch
favorite movies again. Even though HBO and the different TV providers offer
on-demand viewing, there's something about their offerings that makes me much
less likely to browse their libraries and watch random content. The paradox is
that Netflix's UI is on average worse than theirs, so my preference of
browsing shows on Netflix is not a usability thing, it's an emotional thing.

2\. The comments about how Netflix has commoditized time since we no longer
have to watch shows at a certain time each week. And how this is borne out by
their strategy of releasing all episodes at once for shows they produce. I've
found, like the author, that releasing them all at once reduces some of the
fun and anticipation of watching a new episode and talking about it with your
friends. I've also noticed that I tend to binge watch shows when new seasons
drop, and tend to fast forward through less exciting parts of the episodes a
lot more than normal, since I feel I have to get through the whole season so I
can talk about it with my friends. I get really impatient by the time I'm 80%
through the season. But at least this shows how aggressively they are
committed to giving people their time back and letting them consume the
content on their own schedule.

3\. I had no idea HBO was producing so many projects at once. Hollywood
Reporter said they are working on over 100 projects right now. I didn't
consider that Netflix and Amazon could position themselves not just as
alternatives to people who couldn't get a seat with HBO, but could also
potentially produce the show and get it online faster (e.g. steal good
projects from HBO with the promise of fast results, not just taking their
rejects). I still think HBO will on average produce higher quality shows for
quite some time since they have so much practice at it, but it sounds like
they are spread very thin. I would love to read some analysis on how HBO
produces their shows and what their org structure is like there.

~~~
cmsmith
>Even though HBO and the different TV providers ... The paradox is that
Netflix's UI is on average worse than theirs, so my preference of browsing
shows on Netflix is not a usability thing, it's an emotional thing.

I would disagree very strongly with regard to Netflix vs HBO UI. HBOgo tries
much too hard for a stylish UI, but makes it more difficult to find the things
I want to watch. Relative to netflix, their search is very literal and slow,
they make no attempt to remember which series I'm rewatching at the time, they
can't seem to remember which episode I'm on in that series or what place I
paused in a given episode, and the act of trying to jump to a certain time in
the video randomly sends me back to the beginning.

~~~
nocarrier
You're right, Netflix does a great job of tracking state and knowing where you
are in an episode. And their streaming is pretty solid too.

Maybe I gave HBO too much credit. Still, I do think Netflix has a bit of a
Craigslist/Amazon issue where so many people are used to it working a certain
way that it's now hard to change the UI in material ways without causing a
drop in revenue. I've used their new web UI, and it's a little better, and I'm
glad they dropped their red-heavy color scheme, but it's still basically the
same clickable linear lists of shows arranged into a series of rows. I guess
I'm just cranky that there aren't more visually interesting ways to discover
new shows--I find that my eyes glaze over after a minute or two of browsing
with these kinds of UIs, and everyone seems to use them.

I think the worst UI award goes to iTunes though. It is so hard to discover
new shows and movies on there. I can find things I already know about, but
when I'm searching and trying to find something new and fun, it's hard to find
cool stuff. I basically click on related shows for something I already like
until I find something new, but it's not fun and I find better recommendations
on Netflix.

~~~
dragonwriter
> Still, I do think Netflix has a bit of a Craigslist/Amazon issue where so
> many people are used to it working a certain way that it's now hard to
> change the UI in material ways without causing a drop in revenue.

They could do what Google did with Inbox -- provide an alternative UI on a
separate page/app without discontinuing the existing UI.

