But then customers began complaining about paying extra for their beloved DVDs, which quickly blossomed into an online rant-fest. Customers left, prompting even more to leave. Industry folks then ran with the negativity--apologies were suddenly insincere, offerings lame, content negotiations doomed, company vision foolish. Quickster seemed as smart as New Coke, and the only thing plummeting as fast as the company stock was Hastings' decision-making cred.
But Hastings had his day yesterday. Subscribers are up beyond even the rosiest projections, and so is the stock price. And suddenly the focus on streaming seem seems smart again, and so does Hastings.
Who could ever doubt he's smart? I've read some awfully damning opinion pieces on Hastings, and no doubt he can be a trip. But few CEOs can traverse topics as diverse as cloud technology and the entertainment industry--and I know of none who do it so well.
More importantly, his bold, forward-looking strategic decision from years ago appears brilliant once again. In this rapid-fire environment, years can seem like an eternity. But it isn't. And in my mind, that's a primary reason why strategy matters.
Netflix isn't alone in its commitment to longterm strategy. It's how Amazon has successfully moved from book seller to everything seller. They find new angles and commit to them. It doesn't always work out--Mechanical Turk anyone?--but often does. Amazon Web Services, for example, dominates the cloud market because they committed to it long before most had even heard of it.
In a damning Hastings article in Vanity Fair about 11 months ago, an investor said: "Last year, you couldn’t take a step without people asking about Netflix. This year, everyone is here for the funeral.” In 2013, I assume everyone will be there for the resurrection.
It takes courage to commit to true strategy instead of short-term tactics misnamed "strategy." But the payoff can be a business that thrives over time. Here's a quote from a Fortune Magazine interview with Hastings:
Our intention is to get Watch Now service to every Internet-connected screen, from cellphones to laptops to Wi-Fi-enabled plasma screens. We want to make it available everywhere over the next several years.The date of that interview? May, 2007.