Nowadays, Netflix almost takes the place of traditional cable cast especially in United States. The company has 46M subscribers in US, and 79M subscribers worldwide in the 2nd quarter of 2016. Surprisingly, behind Netflix coming to these days is Moore’s law.
Netflix was in the physical DVD by mail business when the company was established. They predict that they need 8 more years to have satisfactory technology for both providers and consumers when the streaming idea comes to their mind. Thus, they form their strategy based on trustworthiness. They spend these 8 years to be a trustworthy company whereas they started to work on streaming. They worked with US Post Office instead of innovative ones for posting movies to prevent mis-routing. In the meanwhile, Blockbusters was the dominant player in the market but they ignore the streaming technology.
Today, Netflix is one of the most prestigious companies whereas Blockbusters has announced the bankruptcy and 1.46 billion dollars dept.
I am aware of the story by the key note of Charles Day in the Crystal Apple 2014. The key point is that Netflix successfully predicts required time to become streaming popular. The prediction is made by Netflix based on Moore’s law.
Moore’s law basically states that number of transistors in a CPU doubles in every two years. This observation is firstly declared by Gordon Moore (co-founder of Intel) in 1965 as an article in Electronics Magazine. Intel adopts the law as matter of honor. Today, number of transistors still satisfies the Moore’s law as illustrated.
An observation raised in 5 decades ago could form an innovative company’s strategy. Also, this innovative company defeats the dominant player of the market. This story shows us again that companies who don’t keep up with the times cannot survive anymore.