Digital Home Thoughts: Why Netflix is Beating Blockbuster

"While I’ve always liked Netflix, I’ve remained dubious as to their potential for long term success. Even when they hit their first million subscribers I thought little of it. From my perspective, with tens of millions of customers, I figured sooner or later Blockbuster would just wipe out Netflix’s market share and opportunity. Instead, Netflix is en route to 9 million subscribers, and I’m more than a little surprised. A conversation last night with a good friend of mine helped me understand why this is happening. It’s a few parts Innovator’s Dilemma, and a few parts just plain bad business. It’s a Cinderella story. Outta nowhere."

Earlier this year I posted why I left Blockbuster. The above article has a nice business analysis of why Netfilx is kicking Blockbuster's butt. While I agree with the article, Netflix success comes down to management actually understands the customer and is proactive in making sure the customer has a positive experience. While my experience with Blockbuster was riddled with periodic frustrations that piled up until they broke the camels back, Netflix has been smooth sailing. When I mail back a DVD, I get a new one two days later. Their streaming works great. When they have had problems, they've been proactive about informing the consumer and liberal about providing credits with waiting for the customer to complain. Their pricing is more than reasonable, especially if you make liberal use of Watch It Now and even though their is a surcharge for getting Blu-ray, $1 additional per month seems more than reasonable considering that Blu-ray disks cost more than DVDs. (Side note: I broke down today and bought a Blu-ray player and added Blu-ray to my Netflix account, my HD-DVD player is sitting in the corner sulking.)