business news in context, analysis with attitude

Reed Hastings, the founder and CEO of Netflix, always said that his business was providing entertainment ... and that those ubiquitous red envelopes in which rented DVDs were sent all over the country were just the delivery system of the moment.

This week, we found out that he really meant it.

Netflix announced this week that it was raising the prices of its various DVD rental plans, and instituting a new plan - unlimited online access to its library of streaming movies for just $8 a month.

Hastings said in a press release that the company was simply responding to consumer preferences, but there also is a financial upside as Netflix makes the shift - the savings on paper and postage for those envelopes, not to mention the cost of the individual DVDs, is said to be significant.

(To be sure, there is competition driving this decision as well. The New York Times noted that “Netflix faces challengers on several fronts online, including, Apple and Google. Hulu, a start-up jointly owned by NBC Universal, the News Corporation and the Walt Disney Company, is also a competitor.)

There’s an important lesson here for every business. Delivery systems are important, but can change as technology evolves ... and businesses have to be nimble and observant enough to embrace these changes.

It is content that really matters. That’s true with video. With news. With food. With beverages. Indeed, with most products.

That’s our Wednesday Eye-Opener.

- Kevin Coupe
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