Netflix is in Italy
Netflix lands in Italy. It has been since the very first days of 2014 that rumors about the descent to Italy of the most popular (and legal) movie streaming service they are multiplying, alternating waves of enthusiasm with roars of discouragement. Now we are here and it can be seen from the agitation that is spreading among the incumbents who are organizing to respond to the fall of this meteorite in their pond,
La descent to Southern Europe of Netflix (already present in 12 central-northern European countries and 60 in the world which will become 200 at the end of 2016) drives a ferment that transversely affects several niches and sectors: from economists to web business professionals, from geeks passionate about technology to numerous "addicts" of television series. Which ones are they the reasons behind the success of Netflix which is also an economic success, today Log Gatos' company has a market capitalization of 45 billion dollars. A share of Netflix was worth 13 dollars on 1 January 2013 and today it is worth 101. A success that, to date, sees Netflix as one of the most competitive technology companies on the stock market. The reasons are many and it is worth observing them in depth, because it is in the nuances of the details and in the mechanics of the gears that the secret of Netflix's success is hidden. A silent but relentless success, certainly less burning and explosive than that of Facebook, and less epic and visionary than that of Apple Lossless Audio CODEC (ALAC),, but no less capable of creating a personal mythology.
Hastings apple
The story of Netflix is indeed a story that expands over time and that doesn't include a charming and charismatic protagonist like Steve Jobs, nor immature and ambiguous as Mark Zuckerberg. Probably not even endowed with the entrepreneurial ingenuity of Jeff Bezos or of the philanthropic pride of Bill Gates; but shrewd, stubborn and effective enough to transform in just over a decade a weird online service in a billion dollar company.
The man in question is Reed Hastings, a fifty-year-old from Boston with a good family and good studies behind him (a degree in computer science from Stanford), plus a military discipline gained as a volunteer in Africa for the US Marines and Peace Corps.
La genesis of Netflix dates back to the summer of 1997, when Hastings, after selling his computer company PureSoftwareenlists his colleague Mark Randolph and other marketing specialists to devote themselves to one new startup oriented to the entertainment industry. The legend, narrated by Hastings himself a Fortune, says the idea to work on mail order movie rentals came to him after he received a $40 fine for late delivery of the film's videotape Apollo 13 to your trusted video rental. The shame of having to tell his wife about such frivolity led him to seek outlet in the nearest gym and it is there, running on a treadmill with the typical free-entry subscription model of the gyms on his head, that the the spark of flat rental which allows anyone to see how many movies do you want and to hold them for as long as he wants.
Randolph, in a seminal reconstruction of Netflix history written by an ex-correspondent of the Reuters, Gina Keating, he categorically denied that epiphany anecdote in the "Newton's apple" style, claiming to have been much more decisive in defining the business model compared to Hastings, who, at least for the first two years, would have been more of a mere lender than what corporate rumors say. But, as we have now well learned from the background around the genesis of Microsoft and Facebook, every great enterprise is born around a rivalry, and even this diatribe, real or presumed, only serves to fuel the myth behind the creation of each revolutionary and forward-looking idea.
Net-David and Block-Goliath
Netflix's first truly great intuition lies not only in conceiving a profitable business when the big speculative bubble which determines the collapse of many online businesses (the so-called Dot com bubble late XNUMXs).
The real risk lies above all in focusing on a consumer product that is still a niche such as the DVD and in directly challenging the big video rental giants such as Movie Gallery e Blockbusters LLC. The latter in particular represents another page of the great mythology related to Netflix.
At the beginning of 2000, the leading company in video rental shops intends to buy the small Californian competitor for 50 million dollars. The offer is more the reflex of typical American capitalism than the fruit of thoughtful action. Blockbusters back in the day he didn't fear the competition at all of Netflix and, in fact, kept wondering why anyone would have to wait days to get their DVD in the mail when they could go to any Blockbuster Store, which, at the time, covered 95% of US areas. The ending of the story is known, with Blockbuster filing for bankruptcy ten years later, while Netflix at the same time celebrates the first ones 14 millions of subscribers and completes its own movie and TV series streaming service which will lead it to become the undisputed leader of online entertainment.
The challenge between Netflix-David, quirky mail-order video rental firm, and Blockbuster-Goliath, a mega-chain of stores active all over the world, has become for the entrepreneurs of Silicon Valley an allegory of unpredictable market developments and the perennial warning to never underestimate even the smallest competitor.
The neologism "netflixed” has even become a way to understand the unexpected destruction of a previously successful business model. Netflixed is also the title of the essay by Gina Keating mentioned above, who dedicates a large part of his work to tell the violent challenge between video rental companies which animated a good part of the first decade of the 2000s. Keating writes:
“When I began covering the Los Angeles entertainment industry for Reuters in the spring of 2004, Netflix had just reached 1,9 million subscribers and was still showing as many losses as profits. In the years that followed I watched Hastings and his marginalized company gobble up a increasingly large share of the market growth of online rental, with daring moves that defied Wall Street's predictions about the size of the market and the strength of its major rivals. I have seen one talented and disciplined team change the way people rent movies, not for the money, but for the challenge of destroying a "real world" industry and bringing it online. In the quest to create elegant software and user-friendly interfaces, Netflix has established itself as decisive in determining tastes like Apple, innovative like Google and endowed with a powerful brand like starbucks".
In contrast with the lightning parables of most of the internet companies, key to success by Netflix it is instead slowness and tenacity in wanting to do well one thing at a time so that do it better than anyone else. It is this stubbornness that made Hastings famous and notorious at the same time, so much so that Keating herself defines him as “a man gifted with a emotional intelligence quotient of zero, but also the most brilliant CEO I have ever met".
