Internet: Following the Leaders

In 1997, after the technological advancement of DVDs had changed both the film and information storage industries, a new company emerged in the movie rental scene. Netf- lix took advantage of the emergence of DVDs and found a way to make seeing your favorite films even easier than renting them for a few days from a chain store. The beginnings of Netflix spanned the innovations of the internet and DVDs perfectly, and this meant that their appeal was almost immediate. Not only could you choose hundreds of DVDs on a “To-Watch List” for lack of a better word, you could also keep the movies for as long as you wanted, without the fear of steep late fees or the pressure of watching a film in 24 or 48 hours, which were staple aspects of the other rental companies.

FirmBee / Pixabay

Netflix quickly outstripped Blockbuster in terms of popularity, because it changed the way that business was done and offered a modern option for those individuals who saw the writing on the wall in regards to the massive presence that the internet would soon become in our lives. Companies like Blockbuster made another mistake: underestimating the dynamism of technology. The way that information was recorded had already been a rather dynamic area of study and design, yet the huge investment in resources and money that Blockbuster put towards its rental service meant that it would be far too large and narrowly focused to ever effectively “switch gears,” should the time ever come that it needed to do so.

In effect, traditional movie rental companies failed to account for the inevitable changes that would occur, hoping that their business model would allow them to both find success and manage to maintain it, in an ever-changing world. Fortunately for Netflix, its co-founders recognized how quickly the world was changing and did not want to get caught into a strict infrastructure that would eventually result in the company becoming obsolete. Reed Hastings is the visionary CEO of Netflix, and he adopted a belief system at the start that has guaranteed the survival of the company for more than 15 years, and counting. As has been said about the company a number of times, “It foresaw its possible demise at the moment of its own creation.”

Tumisu / Pixabay

If the technology of VHS was replaced by DVD in such a complete and rapid takeover, then there was no guarantee that DVDs would not be replaced in a decade or so by something just as revolutionary. However, it was not a more compact disc that would make DVDs a thing of the past; it was the internet. Hastings clearly already recognized the importance of the internet, since the Netflix business model counted entirely on internet users renting and scheduling deliveries of movies. He knew that eventually, the internet would lead to postal services being almost completely replaced with email, which would mean that the postal side of their business would eventually need to switch to a digital format.

Therefore, he designed a business model that incorporated a lack of permanent locations and a great deal of flexibility, so that they were able to shift focus from physical deliveries to online streaming, as soon as it became necessary. Know more about the dynamism of technology in entertainment industry only at the University Canada West, one of the best universities in Canada.


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