Re: You Blew It, Netflix

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By Adamk0310
March 17, 2006

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[This post is in response to our article published 3/16/06, You Blew It, Netflix]

I happen to agree with Netflix's refusal to enter the video game business. True, people would likely keep video games for a longer period of time, but that might also increase the chance of the customer misplacing it around the house or "misplacing it," if you get my drift.

The risk of loss, theft, or damage is also higher. If a copy of Ocean's Eleven gets cracked or too scratched, big deal. A new DVD is what, $5-$10? What if an Xbox 360 game needs to be replaced, which retails for $60 a pop? I'm sure they don't pay anywhere near retail for discs, but there's quite a big difference there. There might also be a higher risk of mail theft if a brand-new copy of Madden 06 could be waiting inside that red mailer...even more so if they used a different mailer for video games. And, as Rick mentioned, those pricey annual games go out of style in a big hurry.

Also consider the added complexity of having all kinds of different systems to worry about. Currently, you get one choice: Region 1 DVD. That's it. Except in a few cases, that disc will be Widescreen, too. What if they have to worry about PS2, PS3 (which will be the expensive Blu-Ray variety), GameCube, Xbox, Xbox 360, PC, Mac? Maybe legacy systems like PS1 and N64? What about the handheld Nintendo DS and Sony PSP? Backwards compatibility might be less important concerning the Playstation and some Xbox games, but there is a ton of complexity there that the DVD model just doesn't have. Let's also not forget what might happen to customer satisfaction if the right title is shipped but for the wrong system.

I'm sure they could pull it off, but at what cost? And how long would it take to iron the bugs out? The challenge sounds like something that fits perfectly with Byrne's personality, but not with the more pragmatic Reed Hastings.

Personally, I'd much rather be invested in the development side than the distribution side of video games.


Disclosure: I own shares of Netflix.

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