Functionality Vs Content
I saw some chatter on Twitter this past week about Netflix and Disney in the wake of Disney’s announcement of Disney+:
I’m long $dis myself and no $nflx at the moment. That said will never not pay $nflx at current pricing https://t.co/aInOGQQFXZ— Lindzon+ (@howardlindzon) April 12, 2019
Disney’s stock was up 11% on the week
And Netflix stock was down 5% on the week
Certainly getting into the streaming game will be good for Disney. But I am less sure that content matters that much when it comes to Netflix.
A friend of mine shared this with me earlier this week:
When I saw that data, I replied to him with this:
It is the frustrations of the prior model (interruptive advertising, by appointment consumption, etc) that open the opportunity for the next model
Given that the new model, streaming, is well entrenched now, I am not saying that functionality alone will save Netflix or anyone else.
But I do believe that the functionality of a service (no ads, binge watching, user interface, curation, notifications, price, etc) are just as important, or possibly more important, than whether or not you can watch The Incredibles on it.
And most importantly, it is the frustrations of the prior model, as I mentioned above, that creates the opening for the new model.
So if you are working on a new model, for anything (it could be crypto, health care, education, finance, etc, etc), you should look very closely at what are the most annoying and frustrating aspects of the current model and focus on leading with features that remove them.
‘By appointment consumption” – great framing. Never heard it put that way before.Hunting down the most frustrating aspects of existing products and services is relatively trivial – it’s finding a viable sustainable business model when having removed them that’s hard.- removing ads was easy. Replacing them with a membership fee was the hard bit.I’m working on an interest-free consumer credit proposition powered by fixed monthly subscriptions. Far more affordable, flexible and sustainable for consumers. Whether we can get them to see that, at scale, breaking the mould of lending being driven by interest – that’s the question.
This is why crypto is so important today, it’s solves all the problems of being an anarchist, to be paid for importing illicit drugs, to hold deal with ransom demands of companies and families held hostage, or to create a Ponzi scheme.
People are risk averse in the domain of gains, and risk seeking in the domain of losses.You said it more simply, “the frustrations of the prior model creates the opening for the new model.”If there is no current pain / losses / frustrations, users won’t typically switch to anything that’s “better” or “different”.
What an utterly insightful post.
That last paragraph opened up the applicability to any business.
For payments, the frustration points are (1) 2-6% merchant fees (merchant side of the market is ripe for a new model; huge opportunity in this 2-6%); (2) Fraud/Chargeback risk; (3) Data breaches. Crypto solves for these, but has frustration points of its own, as in (1) Confusing UX; (2) Price volatility; (3) fiat “stickiness”. Crypto provides us a new model for payments, but we have to create an entirely new system, constructed to provided benefits and incentives to both sides of the market (consumer and merchant)
First, that is a terribly designed visualization.But those features (ad free, binge watching)w are table stakes, soon everyone will have them. In our house we have ad free Hulu, Amazon prime, and Netflix that we get from another household. Amzn and Hulu have better content for us. The loss of Disney won’t help, and neither will how much Netflix spends on original content that often isn’t very good. Also, I suspect Netflix users are very price sensitive — ie how much can they raise prices before people switch or pirate? My guess is that demand is very price sensitive.
Payment systems have to be changed in streaming. Especially when you look at music.
who is doing this right or in right direction in your opinion.for all the shit with apple tv simplicity of use and never having to deal with payment outside of your account is why i use it.
I am thinking more in terms of the payment structure from Netflix/Apple all the way down to artists on the B2B side. Seen one company tackling it.
“Disney + is a streaming service for kids and families”. What a beautiful position to own in the marketplace. Nobody else can make that claim. And Disney will own it. The price is meant to reel in 300 million subscribers worldwide not the 60-90 million they suggest they will have in 5 years. Lots of surprises baked into their lowball estimate.It seems Netflix will do fine too. The value there is still great. Less for a year of Netflix than a dinner out two.As a stock ( Disney owner here), this week proved an incredible comparison to some of the newly minted public companies.Disney, with 20% net profit margins selling at 15x earnings. Lyft, needs to triple revenue from here, with the new revenue earning 25% net profit (which they can’t do), to get to 100m net earnings. A 170 X PE.Wow
> So if you are working on a new model, for anything (it could be crypto, health care, education, finance, etc, etc), you should look very closely at what are the most annoying and frustrating aspects of the current model and focus on leading with features that remove them.Yup. Did/doing that.There’s a big, huge advantage:(1) In some areas, especially US national security, but much of medical research and some other areas, for selected parts of our society it’s doable to move from problem, research, to a solution that is good but just on paper, and then take that work to a good solution of the real problem with high batting average.(2) For far too much, US business is no good at (1); they just are NOT good at (A) getting solutions on paper, noticing the good solutions, and doing the rest with high batting average. Instead too often their evaluation technique is essentially just a modification of that of commercial bankers.(3) Then for something in business, there is sometimes a way out: Take a problem A that has a solution X that is famous and valuable in practice in business but has some flaws, etc., e.g., solves only part of problem A. Then design a solution Y for the rest of the problem.So, business didn’t want to look at problem A, see proposed solution X as valuable, and charge forward. Instead, solution X had to start small and grow into the “famous and valuable” success.Without solution X already being famous and valuable, business wouldn’t take any of problem A, solution X, or solution Y at all seriously. BUT WITH problem A and famous and valuable solution X, solution Y for the rest of problem A is much easier to pursue, i.e., much more likely to be valuable.That is, we already know that plenty of people really want problem A solved, want a solution so much that they make solution X famous and valuable, and DO see the flaws in solution X. So, solution Y is for (i) a problem A we already know people want solved and want the solution a lot, (ii) flaws easy enough to see in famous and valuable solution X, so (iii) we can have some confidence in the value of solution Y to fix the flaws in solution X.Or, always in business one of the biggest issues is, is the problem A serious in the sense that there are lots of people who will really like a good solution, e.g., X, to problem A? Well, from famous and valuable solution X, we have a solid answer — YES. So, we DO know that problem A is serious. So, the flaws in solution X might also be serious and solution Y with a good solution to those flaws might also be liked by lots of people and, say, with some barriers to entry, valuable.So, for solution Y, we get to be incremental starting with A and X.A lot of knowledge is about being incremental. E.g., much of physics is about derivatives, that is, locally linear, incremental, information and solutions. That’s basically what calculus is about.As I mentioned, in some areas, e.g., US national security, it really is possible to go from a clean sheet of paper to a powerful, valuable solution with high batting average but, since US business is not good with that, being incremental is a possible alternative. The commercial bankers still won’t like incremental Y, but some other people, e.g., a founding entrepreneur, can.E.g., there was FedEx: For people in the air freight business, e.g., freight forwarding, it was easy enough to see that nation wide overnight delivery of small packages was a serious problem with no good solution. There was a good solution for cities: Could go shopping at a downtown department store, buy stuff, and ask that it be delivered. Then UPS would pick up all the packages from all the department stores, drive them to a central hub sort for the city, sort the packages, put them on trucks, and have the trucks complete the deliveries the next day. So, for FedEx, do one central hub sort for the whole US and use 500 MPH trucks. Incremental.
I find it hard to believe that kids programming is 8th on this list. Perhaps it’s just my age range. But I can say for certain I would have cancelled Netflix by now if it weren’t for ease of use for my young children. It has truly replaced Saturday morning cartoons. We give our kids free reign in the morning so we can sleep in. I also find it difficult to believe that price is not a factor.
When something is perceived as a utility, price becomes less of a consideration.
That’s due to the low and shrinking population of children in the U.S. Children’s programming is not on my list at all. In fact, I’d maybe even pay to curate out children’s programming.
The opportunity may be on the content side. Billions spent for not that much decent material. There should be another way to get some good stories. Go back to novels like early Hollywood.
Yes, great point. That’s why I reduced my watching of movies a lot, even though I never used to watch them much, even earlier, even though I like diving into escapism (until I build up my pile of gold coins enough to dive into, that is), as much as the next person. A lot of the stuff is sheer garbage. Much of it is just bread and circuses stuff, IOW, meant to push people’s buttons, and a lot of the rest is just unadulterated crap.https://en.wikipedia.org/wi…https://www.google.com/sear…https://www.brainyquote.com…
To be clear, I like (some) movies. It’s just that my tastes are simple: I like only the best 🙂
Happened to pick up a reprint of a old movie poster of ‘vacanze romane’ today. Seemed like the sporting thing to do since I was in the city. A simple story, but what content. The skills of William Wyler…great storytelling of a simple story. https://uploads.disquscdn.c…
Great director and story.
Yup, I can’t improve on that.I have a VCR copy and learned a lot of lessons about Women 101 and Care and Feeding of the Female from that movie. The writer and Wyler saw those lessons clearly and put them up on the screen so that even nerd I could see them. I know; I know; the lessons are cliches and wildly politically INcorrect, but, still, Wyler was right. The guy really understood women!
Okay, here’s the one word explanation. We borrow fromhttps://www.youtube.com/wat…Right, you guessed it, the movie The Graduate and the “one word”, plastics.Well for Disney, Netflix, YouTube, etc., the one word is, and may I have the envelope please, drum roll, please, streaming.For one step more, I start with two headlines just now at Breitbart:Chelsea Handler Jokes About Having Abortions andAlyssa Milano to Share ‘Personal Abortion’ Stories on Her Podcast Did I mention here recently that US family formation SUCKS?Why? Well, look at the women in the video from The Graduate: They look like WIVES well dressed in FAMILIES.So, what happened? We threw away huge fractions of our treasure, along with quite a lot of our blood, on the old problem ofAbsurd foreign adventures. If we throw it away, then we won’t have it, won’t have it for family formation.So, we’ll have a lot of women doing things other than being wives and mothers. Darwin will NOT like that and will react.Then we get a LOT of REALLY unhappy women.Then the Democrat party puts up lots of totally hysterical, irrational, lost, confused women to appeal to such women not busy being good at being wives and mothers.So, we throw away our treasure; men can’t provide for wives and children; women do things Darwin doesn’t like; the women get into serious problems with too many emotions and not enough rationality, “emotionalize instead of rationalize”, get lost and confused, get pregnant anyway, have abortions, etc. DISASTER.We MUST just QUIT throwing away our treasure on absurd foreign adventures. Nearly always the answer is not only “No” but “Hell No.”.Switzerland, Sweden, Norway, Finland, England, Holland, Belgium, France, Germany, Spain, Italy, Hungary, Greece, Australia, Japan, South Korea, etc. are not doing that. We need to STOP doing that.Then maybe in another 20 years we can get back to scenes with women, wives and mothers, as in that clip from The Graduate.It’s not me: I didn’t do it.
I wonder what percentage of Americans do not (or ‘will not’) have a television in their home?
Or a landline?My family has never had a television except for use as a screen for DVD/VHS back in the day and now for streaming. We used to be odd, but now just ahead of our time.
I have a landline that I use so I have a “throwaway” phone number for all the things I subscribe to. I keep the mailbox full so no one can leave me a message. To me, well worth the cost to curate out the calls I don’t want.
Interesting use case. 🙂
functionality without the content i want isn’t very compelling. i’m not a big fan of the homegrown netfilx shows which now seem to make up majority of its offering. 2 or 3 years ago netflix was my default streaming service, no more … not even close. prime has mostly replaced it for back catalog movies & tv (even tho amazon’s is the most awful video control UI imaginable), youtube tv has replaced the cable box and a handful of ott fills in the rest.the only reason i’m still paying for netflix is my kids still use my sub but they’re getting old enough where that cord’s gonna get cut soon enough too.the only real drawback is that i have to re – acclimate myself to tv ads. i’m still pissed at TIVO for committing suicide but hey … ads has always been the price of content and having made a nice living as part of the ad ecosystem it’s hard to complain too much.given relatively similar content offerings functionality gets the edge but user experience is meaningless when i can’t find much worth watching.
Re: Most annoying thing in healthcare -The doctors indoctrinated with bad, outdated knowledge – limited to their silo of specialization, who are generally terrible are diagnosing things – terrible at critical thinking, and so on. The problem with the medical-educational industrial complex is the gatekeeping of access to diagnostic testing, requiring a referral from doctors. Whole fucking health system is broken, full of shit/waste that slows healing down to fully stagnant and prevents healing. Keeping people alive longer or stable is the low bar that has been set, vs. fully healing people and allowing them to thrive – and therefore families, community, and society as a whole.Tied into this is social media with bad UI/UX like Twitter, Facebook, that has amplified and accelerated the problems – and is on the verge of allowing democracy to be destabilized by tyrannical governments taking advantage of indoctrinated, short-sighted, selfish, unhealthy people.This has also allowed society to be taken advantage of by crypto-“currencies” – structured as Ponzi-Pyramid schemes to literally unreasonably transfer wealth from early adopters to later adopters – who will undoubtedly have more and more pressure to force the non-adopters to have to adopt via political means, more and more as the “army of HODLers” grows; the financial markets and those pulling the levers already took advantage of society with the housing bubble crisis (etc) – and now this is the next trick pony.The opportunity for health is also on the content side: teaching and guiding people how to diagnose and heal themselves. The facade that “doctors know best” because they went to school is fading.Something funny I find regarding the frustrations people have with the finance world is that instead of putting the effort into fixing the existing structures of regulation (including payment systems and banking costs), they instead try to circumvent regulations that try to protect society – and that try to keep bad actors from easily flowing money around – by creating a new decentralized layer. It’s insane to think that’s a good idea.P.S. Accidentally clicked ‘Funny’ button and you can’t unclick it – bad UX.
Functionality has become the cost of entry. Content is the true discriminator. No one service is likely going to satiate the needs of most. Subscription to multiple OTT networks will be the norm, if it isn’t already, from light users (1-2) to heavy users (3-4).
This seems to be the opposite strategy of most new platforms. Usually they try and compete with exclusivity, which is just annoying for the consumer.I love Jay Z, but goddamn I hate what he did with Tidal.
“People don’t buy what you do, they buy why you do it.”Netflix and Disney have very different belief systems.
Funny, I just rewatched Sinek’s infamous TED talk in preparation for writing a blog post.What are the two different belief systems in a nutshell?
“Content is King.” “Distribution is King.” Or, maybe even, functionality — what others might call “functionality”. With content it’s never “either-or.” It’s both. It’s like an engine. Each cylinder is crucial. The greatest distribution in the world will not help if the content is lousy, and vice-versa.
I’ll never dump Netflix, but I may give Disney + a try for the kids. My cable bill (over $130) a month is up for grabs. The old model which includes cable operators suck. I can’t wait to cut cable, it’s the worst customer experience imaginable.
I have 3 kids and live in a country where due to the backward nature of content distribution, we often don’t see the full content library (the polite way of saying this). Because of this i can tell you real world use cases. 1) my kids pound youtube 2) we end up subscribing to multiple content sources and 3) my youngest is happy to keep rewatching his favorite channels (he’s 6).What is apparent to me is content doesn’t need to be evenly distributed. You get one great show on a platform and its enough to pull you through. No one is pumping out great content all of the time…We will end up in a world where aggregation will happen because i can’t see us paying 15 bucks for subs on amazon / netflex , hbo etc etc. Just crazy they are replicating that channel cost.
I think that Netflix’s focus is going to win at the end. I wish they didn’t pursue original programming and focused more in what they do great, but I understand their reasons to do it.However, if Netflix pursues being more like Disney, I’m not sure there is going to be a winner.
Very interesting. I would say the graph is a little misleading with 1 as the highest ranking, but attention to detail. My young son is a power user of Netflix so I think Disney is on to something.
For what it’s worth, I’m on YouTube TV over Sling TV because the controls, UI and experience is/was so much better.
Only people with little kids care about kids programming.If you take a look at population data, the percentage of children as part of the overall population in the U.S. is decreasing and is projected to continue to decrease. So, Disney is going after a shrinking base. While worldwide population is projected to rise, it will be doing so in the poorest parts of the world, not tech enabled middle class areas.My qualitative point of view on content: Disney is like wonder bread. Full of nothing. I can’t think of one Disney production worth my time yet can think of several Netflix ones I adore.