Netflix Fix and the Long Tail
That’s right. I finally broke down and joined Netflix. Actually, I’d already signed on for 2 free weeks during my last semester of college. Of course, I had to drop it right away because of the student budget. I had a series of massive papers and a presentation examining the online DVD rental company and I wanted some real exposure just to make sure I knew what I was talking about.
I was totally fascinated by the company’s business model, blown away by the way it moves DVDs around the country with very little inventory in-house on any given day. My group spend several pages explaining “Long Tail” economics, only we didn’t call it that because we weren’t subscribed to Wired and didn’t know it had a name. It may sound a little trite, but the concepts we learned will revolutionize business and a lot more. Basically Netflix is able to blow Blockbuster out of the water by serving hundreds of very small niches that are very important in the aggregate. Blockbuster (in it’s brick-and-mortar stores) simply can’t supply small niches because a low-demand movie can’t pay the rent on its shelf-space.
And that’s why I’m switching. Netflix has so much more selection than your local brick-and-mortar rental store, and the experience is way better. Instead of looking through the same crappy “hits” at Blockbuster, I go online to Netflix and rate the movies I’ve seen. The Netflix recommendation engine then leads me to other movies. If you Liked “Amadeus” you’ll probably like “Ghandi”. If you liked “Ghandi”, you’ll probably like “Hotel Rwanda”, “Rabbit-Proof Fence”, “Waking Ned Devine”, “The Dish”, “October Sky”, etc.
But there’s so much more. Documentaries. TV shows. Music DVDs from Jethro Tull to Thelonious Monk. RSS feeds make it easy to browse new releases, and I can opt to have R-rated movies not displayed. Can I just tell you how much time that saves? I’m not going to become a movie nut, because I do believe there is such thing as too much entertainment, but for the little time that I have to spend on entertainment, this is just so much better.
All in all, Reed Hastings is a genius. Netflix continues to grow, while Blockbuster (despite it’s copycat online ventures) hasn’t turned a profit in years. Long Tail Economics will change American culture as taste are allowed to become less homogenized. Independent filmmakers and publishers will be able to find an audience without having to appeal to the lowest common denominator. The internet will further this phenomenon as content that was unavailable due to the prohibitive economics of physical distribution channels can be accessed by anyone anytime. These dynamics already affect everything from CD sales, to software, to journalism; and I believe this is only the beginning. Long live the Long Tail!
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Tags: Blockbuster, Business, Culture, Long Tail, Netflix, Recommendation Engine, Reed Hastings, Technology
March 28th, 2006 at 8:29 am
I’m sold! I need to get on this, although I’ve used blockbuster online and really liked the selection as well.
March 28th, 2006 at 10:38 am
I also signed up for a Netflix trial as a student to get a couple of movies that Blockbuster didn’t have: Revolution OS and Voices of Iraq (both good movies, by the way.)
If you want to see those R-rated movies after all, you might like CleanFilms.com. CleanFilms.com is to Netflix.com what Clean Flicks it to Blockbuster.
March 29th, 2006 at 12:37 am
The first I heard about long-tail economics was at Amazon.com. They are yet another company that succeeds through focusing on the long-tail. They have some items of which they sell one or two copies in a year. A brick-and-mortar store is stuck with the choice between not having a book like that in stock, and overstocking it (by having a copy in various different stores so that the one person who wants it this year can get it at a local store). An online retailer has an advantage in being able to store just one copy of the book, and not having to worry about which store to hold it in.
Most people, if they want a book that’s pretty popular, can easily drop by their local bookstore to pick the book up. They get the book faster than they would from an online system. However, if the book (or other item) is not likely to be carried by the local bookstore (because it’s so obscure), it’s easier and faster for the customer to purchase from an online store that uses long-tail economics.
It’s a very interesting topic. I was really interested when I first heard of it! :)
August 8th, 2006 at 7:04 pm
I think people hype-up the notion of The Long Tail a little bit much; most often they do this with very little understanding of what it truly means. I posted a response to The Long Tail here:
http://www.shmula.com/162/the-long-tail-ad-nauseum
I’ve received numerous emails from Chris Anderson and, from others as well, on my post, wanting more specificity regarding Amazon data. The Long Tail is real, but there is much more to it than what people think and much more to it than what Anderson has explained in his book.