You just got netflixed! Ouch!
by hannahskurnik ~ October 24th, 2011. Filed under: Uncategorized.
The next modern word entering the dictionary, after google, is “Netflixed.” To be Netflixed is to disrupt a previously successful business model, at least it is according to Saul Kaplan’s article for CNN. Netflix’s model of paying a monthly flat-fee for unlimited mail-in movie rentals was extremely successful, until they changed.
A business model has become a key factor in selling a product. It needs to fit the product and allow consumers to get exactly what they want. In class Mahesh outlined this with the direct buy business model for Dell. Netflix beat out Blockbuster because it had a model that was more efficient and allowed customers to tailor their own product. Customers are able to pick how many movies they want and choose from a variety that goes beyond what is just held on video stores’ shelves. Blockbuster’s retail model worked for them for a while, but as soon as Netflix’s better model came in they were toast.
Together, Blockbuster and Netflix show that companies can’t just have the right model, but also need to know how to change their model. Blockbuster didn’t change and it hurt them big time. Netflix did change, but chose the wrong model to change into. It’s all about having the perfect model for the customers.