Netflix calls off million dollar contest sequel

Netflix was so thrilled by the results of its first online contest offering a million dollars to people who figured out how to improve the service’s movie recommendation algorithm, that they announced a follow-up contest.  However, a lawsuit and FTC investigation revealed that Netflix gave the folks participating in the contest access to some member rental history to see what ways they could improve their suggestions. 

The lawsuit by a closeted lesbian whose rental history was revealed (I’m guessing without her consent) sued claiming that she could be identified by her rental history and that the disclosure of her closeted status could impact her kids at school.  Thus, Netflix announced it would be cancelling the contest much to the disappointment to all those who want to be millionaires.

Netflix smart deal with LG Electronics

When I posted about the Netflix deal with TiVo, I thought that was a loser but this one makes sense. Here, LG allows people who buy their TVs to connect to Netflix without an external box.  TiVo like Netflix is a subscription service with a very similar business model but LG is a manufacturer working with a software service provider and that has much more potential. 

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Netflix available through TiVo

The deal announced in November has now become reality.  TiVo has just release software to users that will allow them to download 300 titles from Netflix.  Mac users already have this feature.  Netflix developed it own service Roku to stream movies to customers.

In my previous post about Netflix, I wondered if they weren’t “just a middleman that is easily circumvented?”  I feel that even more strongly now.  Netflix is going from an end to end service to a plug-in.  I don’t think its brand is strong enough to get swallowed up by the companies providing the service that Netflix plugs-in to.

Netflix: No More Used DVDs for Sale

The way of floppy discs?

Selling them to wholesalers?  Increasingly the company is moving away from dvds having made deals to stream with Tivo and Samsung recently as well as LG Electronics and Roku.  See press release here.

It will be interesting to see how this pans out for Netflix.  They have no choice but to move in this direction but what made them successful was quick rentals without late charges through the mail.  They had an idea and a distribution efficiency that put them ahead.  Now what do they have?  An extensive library and a good website as well as branding and a customer list but if as the technology improves, well that be enough?  Aren’t they just a middleman that is easily circumvented?