What do Netflix and Enterprise Document Management Have in Common?

Reed Hastings, co-founder and CEO of Netflix appeared on Charlie Rose on May 5, 2011 in a very interesting interview.  Netflix was founded in 1997 to distribute entertainment DVDs by mail and has completely changed the industry according to John Doerr of Kleiner Perkins Caufield & Byers.  

Netflix offers over 10,000 movies and currently has 24 million subscribers - up from 15 million 1 year ago - and growing at a rate of 70 percent. Their DVD distribution has grown every quarter to date, but may decline slightly this quarter due to the heavy increase in video streaming now offered by Netflix.  On-line video is experiencing an explosion in viewing because it’s so easy to click and watch.  DIRECTV is offering current-run movies as a $30 premium direct play option, but the studios are being careful not to cannibalize their theatre market because so much of the downstream revenue is connected to the success of the original box office.  For example, what Netflix pays for a movie two years after release is relative to the initial box office.

For the last five years Netflix has focused on streaming.  YouTube showed the way in 2005.  It took 1.5 years from beginning in 2007 to launch their first streaming offering.  With traditional plastic media and broadcast communications whenever a new technology, such as 3D for example, is released there is initially not enough content available to drive sales of devices that can view it.  The innovation cycle is about 10 years.  The Internet accelerates that process by being able to serve multiple generations of devices with different versions of the content.  Manufacturers like that because it drives demand for the new devices that can receive that content.  In 5-10 years most media will be available over the Internet.

There are 5 billion active mobile phones in the world.  Smartphones over the next few years will be as fast as the fastest laptops.  The smartphone will become your remote control (and there are already apps that accomplish this in certain aspects).  When you walk into a room your smartphone will sense who else is there, know your interests and preferences.

Just 10 years ago AOL was the king of the world serving subscribers via dial-up modem at 56k.  Put that into a spreadsheet using Moore's Law -  a doubling of speed every 18 months - and that projects to today having an average speed in the U.S. of 14 megabits/sec which is just about where we are now (DSL is around 6-10 mbps).  If you drag that out to 2021 the model predicts that the average American home will have 1 gigabit service - about a 100x increase.  That sounds shocking, but when you realize that Google is currently wiring Kansas City with fiber to deliver with their amazing Google Access project 1 gigabit service as a prototype.  But this predictability doesn't depend upon a single technology.  It's about knowledge increasing, and so it spans multiple technologies.  So we know that in 10 years it'll be mostly a 1gb world which will enable vast increases in the consumption of content.  Costa Rica laying fiber optic cable down dirt roads - it’s a higher priority than paving the roads!

Netflix runs in Amazon's cloud.  When one of Amazon's data centers went down a couple of weeks ago, the network traffic got switched over to another data center, and Netflix didn't experience so much as a hiccup.  The incident was really a testament to the power of cloud computing.  

The Netflix subscription in 2005 was $20/month.  Then it dropped to $16, then $13, later $10, and then $9, and now it is $8/month.  The economies of scale have enabled them to lower the cost as subscriptions increased which in turn has accelerated the growth of the market.  Netflix is also planning to become more social.  You’ll be able to see what your friends are watching, and share experiences.  When you walk into a room, Hastings predicts, you'll be able to discover what entertainment interests you have in common with other people there.

So how does all this relate to enterprise document management?  Like movies, business documents will move into the cloud.  The reduction in complexity and the economic benefits are simply overwhelming already, and costs will come down as user levels and storage volumes increase over time.  Higher universal bandwidths will make content exchange and real-time search anywhere, anytime more and more practical.  Documents will become more "social" and broadcast their common key words and indexes to other documents so you can easily access all content relevant to a particular search argument.  Business documents will be increasingly accessed by mobile devices.  

To learn about how Digital Designs can take your business beyond paper and help you meet the digital document future visit www.ddilink.com.

Until next time,

John Queen