But Forrester Research analyst James McQuivey says is a powerful example of disruptive digital product strategy with lessons for other industries and firms. In a sense, Netflix was a mimic of Apple, which always emphasizes controlling the product inputs to maximize end user experience. You might argue Netflix has followed the same playbook.
"The company that controls the user’s total product experience will win, whether retailer, producer, distributor, or platform," says McQuivey. As you can imagine, that has implications for long-standing debates about the merits of "open" and "closed" approaches to product development. And the implication might be that the relatively more closed approach is winning.
"Makers of products as wide-ranging as sleeping pills, running shoes, and auto insurance should all follow Netflix’s lead and control the total product experience they deliver," says McQuivey.
There might be other lessons as well. Firms such as Amazon use digital processes in every facet of the business. Digital becomes a key element of product design, development, testing, production, distribution, and customer satisfaction. This way, a company dramatically reduces its cost to satisfy customers as well as the time it takes to trial and release new products, leading to an economic advantage.
Netflix also has used disruptive pricing based on current and future costs, not historical rates. Such "forward pricing" arguably was used deliberately by any number of service providers in the last Internet boom of the late-1990s. One can argue with the wisdom of those moves up to a point. Still, lower prices seem always to be a feature of Internet-based competition these days.
There might be other lessons as well. Firms such as Amazon use digital processes in every facet of the business. Digital becomes a key element of product design, development, testing, production, distribution, and customer satisfaction. This way, a company dramatically reduces its cost to satisfy customers as well as the time it takes to trial and release new products, leading to an economic advantage.
Netflix also has used disruptive pricing based on current and future costs, not historical rates. Such "forward pricing" arguably was used deliberately by any number of service providers in the last Internet boom of the late-1990s. One can argue with the wisdom of those moves up to a point. Still, lower prices seem always to be a feature of Internet-based competition these days.
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