In the movies, “if you build it they will come.” In reality, customer acquisition isn’t so easy. You’ve got to build your theater (or stadium) before you can fill the seats with customers. Then you have to let your customers know there’s a show to see. Once they’re aware, you need to make sure you give them something good enough to get them to come and keep coming back. Slowly but surely, Netflix (NFLX) is working through this process with digital delivery.
Already established as a mail-order DVD rental service, the Los Gatos based company knows eventually, maybe in three years, five or ten, digital distribution will overtake and displace their physical DVD delivery service.
They launched their “Watch Now” on demand streaming service in January 2007 to begin their prolonged transition.
Reed Hastings, the company’s chief executive officer, explained at the time, "We named our company Netflix in 1998 because we believed Internet-based movie rental represented the future, first as a means of improving service and selection, and then as a means of movie delivery… While mainstream consumer adoption of online movie watching will take a number of years due to content and technology hurdles, the time is right for Netflix to take the first step.”
Nearly two years later, progress is being made. Netflix has embedded their technology in a range of consumer products to provide a direct bridge to the TV. The first installation came in a standalone product from Roku. Follow on announcements introduced an Xbox partnership deal and, then most recently, an LG Blu Ray player that came out of a previously announced partnership.
Now, Netflix is back to work filling the seats at their evolving theater.
Tuesday, the company announced deals with both CBS (CBS) and Disney (DIS) to bring added network TV programming to the Watch Now library (NBC, Showtime and others are already licensing content). Per the new deal, about 500 episodes from the Disney Channel will get Wach Now treatment. CBS will offer 350 episodes of programming including CSI, Numbers and classic titles including MacGyver and Family Ties.
As with all Watch Now offerings, there is no added charge or quota limitation for existing Netflix subscribers who are part of one of the company’s unlimited DVD rental programs.
The new additions will push the streamed program catalog to more than 12k titles. That still pales compared to the 100K plus DVDs in the mail-order segment of business, but with a long sighted view and years before Watch Now becomes the core of Netflix’s services, it’s a step in the right direction.
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