Thought Going Digital Was Easy? Take a Look at Netflix. ..but you may want to cover your eyes

It wasn't too long ago that Netflix was the darling of every movie lover. Once the video store packed up its tapes and DVDs and went home for good, it was Netflix that came to the rescue. What could be easier. Check out titles on their site and have them mail them to you. No time limit. When you are done, return it in their patented postage-paid envelope. But something happened on the way to success (sound like Blockbuster all over again?). Netflix decided to add instant streaming to its offering. Great idea. The time had come. It had come so fast in fact that the CEO Reed Hastings was quoted as saying that the future of Netflix was in streaming. It almost sounded like the company had to keep sending out those nasty little DVDs for a while longer but they really didn't like it.

Obviously, the streaming model is MUCH more profitable. No disks. No postage. No irate customers wanting to receive their next movie but realizing that it is Sunday and they are not likely to get mail that day. To make matters worse, the postal service is losing money fast than--wait--I can't think of any entity that is losing money fast than the good old USPS. This mail result in the elimination of Saturday delivery. Trying to run a business today at the whim of the USPS is not the smartest business model around.

So what did Mr. Hastings do? First of all, he pissed off virtually all of his customers by substantially raising the fees to rent by mail or stream. After he had barely scratched the surface of his hate mail, he decided to rebrand the DVD side of the business as Quickster with its own website separate from Netflix and its own billing platform. In the middle of losing customers and alienating others due to the price increase, this split personality decision could be the last straw for many subscribers. There are other choices including those little Red Box kiosks just outside our favorite grocery store where we can pop in our debit card and make a purchase for $1.07 (including tax) to rent our favorite movie. Of course, the Red Box model is similar to bankrupt Blockbusters concept but at about a third of the price and with more convenient locations.

So Netflix is learning the lesson so many businesses are learning today. "Going digital" may not be as easy as it sounds. There are land mines, technology issues and unexpected competition around every corner. And in the time it takes you to go live with your new site, there are a half dozen companies you never heard of who had the same idea you did but beat you to the punch.

Everyone wants to "go digital" but gaining market share with that model could be as difficult as waging another 10 year war but this one could be over in 10 months--or even 10 week!