Netflix DVD JTBD

If I listened to my customers, Henry Ford lamented, they’d have asked for a faster horse. Let’s peel back this meme.

Superficially, Ford noted, customers do not know what they want. It takes visionary God-given insight to make things for people. Maybe.

What’s happening is that customers share a suggested solution. Ask the right questions to find the problem.

Prior to streaming in 2007, Netflix mailed DVDs. The business worked better than Blockbuster because movies came right to the customer, who returned them whenever they pleased. Life was good.

Mostly. People told Netflix they wanted new releases faster. That was the suggested solution. Instead, Netflix asked questions. If some customers got their newly released movies right away and others did not, would customer churn differ between the two groups?

And it did!

But not by much. At least not by enough to justify the extra cost of 2004’s The Machinist.*

But people wanted more new movies. Right?

Here Netflix got into the problem part of Ford’s words. Customers ask for one thing but what do they really want?

What the Netflix customers really wanted was any movie faster. To address this JTBD Netflix did two things.

First, they built more shipping centers so more movies were geographically closer to more people. During this expansion, Netflix went from ~20 centers to ~100.

Second, they changed the website so ‘local’ movies were presented on the homepage. A customer might log in to see Shrek 2 rather than The Incredibles.

Customers said they wanted newer movies, but what they wanted was faster movies.

*That’s another Netflix find. We tend to like Adam Sandler movies more than Drama/Thriller

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