The advent of Netflix on the media scene has been one of disruption that moves along the value-chain spectrum of video entertainment. Its roots as a DVD distributor via mail showed it as a disruptor of who until then was the biggest distribution channel for DVD's from movie studios: Blockbuster... in a period of less than 10 years it completed its disruption having acquired a market cap of various billions at the time when Bbuster was filing for bankruptcy. A graph of the disruption in play: http://yhoo.it/kZKT0G... since I like the topic on disruption, here's another one of Apple vs. Nokia/BBerry: http://yhoo.it/k8vMBn, which has really hit in the last 24 months: http://yhoo.it/j9GJnO
Even before it completed its BBuster disruption, it was already seen as a potential disruptor to video distributors into the home as it digitized its content and set its sights on distributing via bband ("NET"Flix) - providers via cable or satellite... which made them move aggressively in two main ways: (1) expand themselves as multiplatform providers, and (2) seek additional control over the rights to content... despite all the talk about cord-cutting, the low price and long-tail strategy fit NFLX best as a cord-shaver that could live together with cable as an add-on, thus threatening premium tiers offered by these services... establishing that there are certain things valued by consumers that a NFLX would not be competitive in offering: news, sports, live events, plus the still (and probably ever) valuable elements of a curated list of branded linear channels (content), it situated itself as a basic-services add-on...
Having clearly defined its space and its value proposition within the cabsat space, but with its disruptive juices ever flowing, it then started experimenting along two dimensions: (1) original programming - thus threatening its own suppliers (and thus increasing its power within the value chain), and (the latest) (2) seeking to become a network within bband - arguing that not unlike people pay for cable to get certain channels, people pay for bband to use NFLX.
This last pt has been ridiculed by many arguing that people don't necessarily get bband to get NFLX (true), but, its also true that people don't subscribe to bband to get NFLX any less than they subscribe to cable to get some 2nd or 3rd tier channels... or along the same lines, NFLX might be more of a reason for subscribers to increase their download speeds (and spend more money on bband), than 2nd or 3rd tier channels would be in subscribers paying more for cable.
At the end of the day, NFLX's disruptive power will stop at some pt along the value chain, and I would argue it would never fully compete with networks - companies like Viacom have the knowledge and drive the necessary company culture to create the content that particular targets desire (or don't know they desire), and that's a special skill that not easily disrupted. The kind of disruption that NFLX did - was business first (dvd via mail) and then technological (SVOD via bband), where as talent/creative disruption is something not as accessible... Along the content axis though it will become an enviable competitor to simple "premium movie distributors" who today get a fee by delivering the svc via cabsat.
The NFLX story is one of disruption in our industry that is still being written... that led to the demise of some businesses and led other businesses (that thought they had barriers to entry) to have positive change.... the happy ending is that it has increased the amount of consumption of this great good that we call "branded entertainment"
Tuesday, June 14, 2011
The Euro - the beginning and end of it
A currency union can't survive by combining less competitive, smaller economies with more competitive, larger economies without a common fiscal/borrowing system and/or labor mobility across the territories. Before long, the currency follows the bigger more competitive countries, and the smaller less competitive ones are left with an ever decreasing ability to produce/compete/grow, thus resulting in employment loss, decreasing growth and ultimately stagnation. The only way out for these countries is to: (1) catch-up in competitiveness (not possible in the short-term), (2) for the smaller countries to coordinate salary deflation across public and private sectors at the same time (not possible outside of a brutal dictatorship), or (3) to devalue and adjust prices via the currency mechanism. In summary, the competitive adjustment needs to happen via the relative prices (if currency is fixed) or via the currency if its floating.
As such, the Euro's survival looks very bleak, unless Greece, Portugal, Ireland and Spain (And Italy) can catch-up in competitiveness... or most likely - they'll get out of the German straight-jacket.
I wrote two posts earlier on this:
http://jtolosa.blogspot.com/2010/05/euro-clock-is-ticking.html
http://jtolosa.blogspot.com/2009/04/spain-new-argentina.html
and its surprising to me how long it takes for the general consensus to agree to the above reality - which has been lived over and over again during the last 40 years.
The European dilemma was exacerbated because so much credit flowed into these weak countries which was put to work in unproductive assets, thus creating debt that was ultimately not able to be repaid (due to the asset bubble and the reality of the lack of competitiveness), thus, advancing the day of reckoning.
No matter how far the can is kicked, these countries will need to get out of the Euro because we were not all created equally competitive... and the difference in competitiveness needs to be reflected in relative wealth at some point... and the only democratic and equitative way of pushing through the difference in wealth (without people noticing) happens to be an exchange rate.... let exchange rates float, and the market dictate how rich or poor countries become... fixing currencies with larger and more competitive countries is like creating a vision of an oasis in the middle of the very dry desert...
As such, the Euro's survival looks very bleak, unless Greece, Portugal, Ireland and Spain (And Italy) can catch-up in competitiveness... or most likely - they'll get out of the German straight-jacket.
I wrote two posts earlier on this:
http://jtolosa.blogspot.com/2010/05/euro-clock-is-ticking.html
http://jtolosa.blogspot.com/2009/04/spain-new-argentina.html
and its surprising to me how long it takes for the general consensus to agree to the above reality - which has been lived over and over again during the last 40 years.
The European dilemma was exacerbated because so much credit flowed into these weak countries which was put to work in unproductive assets, thus creating debt that was ultimately not able to be repaid (due to the asset bubble and the reality of the lack of competitiveness), thus, advancing the day of reckoning.
No matter how far the can is kicked, these countries will need to get out of the Euro because we were not all created equally competitive... and the difference in competitiveness needs to be reflected in relative wealth at some point... and the only democratic and equitative way of pushing through the difference in wealth (without people noticing) happens to be an exchange rate.... let exchange rates float, and the market dictate how rich or poor countries become... fixing currencies with larger and more competitive countries is like creating a vision of an oasis in the middle of the very dry desert...
Subscribe to:
Posts (Atom)