Matt BrittonFounder & CEO powering AI-driven consumer insights

Netflix Took a Major Risk

Name: Netflix Took a Major Risk
Uploaded: 2018-10-17T03:37:35Z
Channel: Matt Britton
Description: A brief spoken commentary arguing that large organizations tend to be risk-averse, illustrated by Netflix’s strategic shift from DVD rentals to…

17 Oct 2018

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A brief spoken commentary arguing that large organizations tend to be risk-averse, illustrated by Netflix’s strategic shift from DVD rentals to streaming. The speaker emphasizes that meaningful innovation often requires sacrificing current revenue (citing Netflix walking away from most of its DVD revenue) and warns that risk-averse incumbents will be disrupted by startups willing to embrace risk.

I think the biggest issue is that large organizations are adverse to risk. I mean, Netflix is a company that walked away from 90% of their revenue when they saw the writing on the wall that consumers did not want to consume content over DVDs anymore, and they shifted to streaming. So they walked away from 90% of the revenue to shift towards a 10%, which they thought was the future. I don't think you'd have many major organizations be willing to walk away from 10% of the revenue, let alone 90%. But that's really what it takes. You have to take three or four steps backwards to take six or 10 steps forward. And many organizations just are not willing to do so, especially when their C suites are filled with people who are on golden parachutes. And I think until these companies are willing to embrace risk, you're going to have other startups that are and are going to disrupt them and ultimately eat their lunch.