Boy oh boy is Netflix in a pickle. Following Strategy 101 – create a separate organizational unit for an emerging business that has the potential to disrupt (e.g., destroy) the core business (thereby protecting the new from the old) – has now led to a customer revolt. I guess the problem is not so much that anyone is occupying Netflix, but that they're not!
Netflix is facing what I like to call, with only some irony, the "Blockbuster Problem." When you are the top dog in a business segment, not only is it easy to get complacent about who got you there in the first place – your customers – but you also draw the attention of everyone else in the wider business environment. That means copycats, more competition for key resources, and more difficulty differentiating your offering from others. Groupon has yet to solve this very same dilemma. For Netflix, this translates into much higher acquisition prices for content, more attention paid by DISH, Direct TV, Comcast, Time Warner, and company, and less of that magical "We're the underdog, so entrepreneurial, and cool" that has characterized rocket growth from Nike to Starbucks.
Isn't love so ephemeral?
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