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There's often a temptation for brands to do too much and although new initiatives might seem right for the brand and even make good business sense, there can make an amazingly complex world, even more so.

Witness Netflix's recent shuttering of its Red Envelope division which distributed over 100 films in its short life, including the critically acclaimed Two Days in Paris.

However, it's existence created incredible complexity for the company, especially in its relationship with the studios.

According to Variety....

"One hurdle to continuing Red Envelope, execs said, was the notion of the company competing against the same studio suppliers it was negotiating with every day over DVDs and streamed content. The complications involved in acquiring, producing and distributing pics were an unnecessary headache for a company already battling a resurgent Blockbuster and the dizzying pace of technological change and consumer habit."

Just look at the complexity here..

1. Competing with its own suppliers
2. Having to acquire produce and distribute films
3. Dealing with the competition
4. Copying with technological change
5. Dealing with the pace of change of consumer habits

Netflix is not alone in dealing with such complexity, most brands are trying to work the same things out for themselves with increasingly limited bandwidth.

While the cry from many analysts looking at the agency side of the business is to provide more value add and to deliver more creative business-building ideas, this might be the last thing clients can cope with.

Perhaps, rather than adding to the complexity, we should instead, be looking for ways to help them streamline and simplify the complex.




Posted by Ed Cotton Historically, we are used to thinking of Apple as a niche player, it still is in many ways, but its new businesses appear to be scaling pretty fast.

Movies

According to Variety, Apple's move into the movie business appears to be working quite well.

"Studio execs said that iTunes movie sales and rentals -- which the computer company said tops 50,000 daily -- dominate the small but closely watched digital movie biz. Apple is now on track to sell or rent 18.25 million movies a year, or triple the number of last year, before it inked deals with all major studios for new-release rentals and sales."

Phones

Apple placed an order with Samsung for 50 million NAND flash chips. It's basically taken over Samsung's production. The order is so big, Samsung is asking its other customers to wait. A fascinating development when you consider that Samsung also wants to play in the phone wars, but here it is helping a foe with a critical component.


Posted by Ed Cotton Netflix may have invented the magic envelope, a great recommendation engine and seen off the billion dollar challenge from Blockbuster, but the battle to bring movies into the living room has only just started.

The contenders are lining up with everyone from the predicablecable players like Comcast, to the newbies like Apple all wanting a piece of the pie.

The video business is moving from physical pieces to digital bits, just as Nick Negreponte predicted all those years ago and Neflix, a king of the DVD space, needs to defend its turf and make plans.

The latest defensive play is a venture with LG ,who this Fall, will release a set-top box that allows internet access and importantly access to a download service from Netflix.

According to its press release.

"Internet to the TV is a huge opportunity," said Netflix Founder, Chairman and CEO Reed Hastings. "Netflix explored also offering its own Netflix-branded set-top boxes but we concluded that familiar consumer electronics devices from industry leaders like LG Electronics are a better consumer solution for getting the Internet to the TV."

Clearly spinning the positive here and obivously using the word opportunity, when threat is perhaps more a appropriate word.

Netflix is a strong and resiliant brand, but it's going to have its work cut out to defend its turf against the onslaught from deep pocketed players.


Posted by Ed Cotton Netflix has been hailed as one of the most innovative business ideas in recent history.

Much of its success has been down to the brilliant design of its envelope, a very simple, but important element that allows the business to function.

It now appears this envelope has been adding costs the United States Postal Service that it can no longer tolerate.

According to Engadget.

"Apparently, those buggers have cost the US Postal Service a staggering $41.9 million in additional labor costs over the past two years due to their "nonmachinable nature," and if things aren't changed, it could cost 'em another $61.5 million over the next couple years. In a letter from the Inspector General's office, Netflix is being, um, asked to rework its mailers or face a $0.17 surcharge per envelope, and if such a fee was tacked on, it would reportedly decrease the outfit's monthly operating income per paying subscriber by a whopping 67-percent. Not surprisingly, it sounds as if Netflix will bite the bullet and redesign the problematic mailer if the USPS is serious about the charges, so feel free to keep an eye out for a design change in the not-too-distant future."

Given that Netlfix offered a $1 million prize to anyone who could improve their recommendation algorithm, it's possible we could be about to see Netflix launch a design competition for its new envelope. That 67% decrease in operating income means the prize money is likely to look rather good.

Stay tuned.


Posted by Ed Cotton "Blockbuster lost more than $600 million in annual revenue from its no-late-fees promotion and the free movie exchanges that were part of its Total Access program, which connected online and in-store memberships."

DDI


Posted by Ed Cotton