Conquering the Long Tail

On-line databases or/and partnerships with telecom operators allows companies such as Netflix to take advantage of a much increased share of the long-tail. Previously, in order to rent a DVD, one had to get dressed, go in the street and find a video rental store. Netflix came in with a disruptive business model and changed all that. Users had the power to rent DVDs from their computer and would only have to wait for it to come in the mail. But this is not all, with Netflix's shift from product to service provider, users can now stream the films they have rented from the website, giving the additional benefit of instantaneous service. Continuing to improve their service will enable them to reap more benefits as they will not have to deal with the fixed costs of storing the DVDs, mailing them to the clients and general wear and tear of their products. This move to a digital movie database will enable Netflix to acquire more movies in order to complete their database and thus satisfy the needs of their every client.

Long Tail
Incumbent movie rental companies such as Blockbuster could not satisfy much of the long tail due to the high inventory cost of their products. Having stores in key locations (expensive rent), staff and storage led to the failure of the company when faced with competitors operating under a different cost structure, such as Netflix.
Many more advantages come to mind when thinking about what Netflix can do with its online database. A myriad of opportunities to increasingly satisfy the consumer with simple web analytics exist, such as an Amazon-style personal recommendation system, a Facebook-style profile to check what your friends are watching, what they liked/disliked or even what they can recommend for you. In addition to this, Netflix can increase their revenue source by developing algorithms such as Google Adsense, which should, of course, be kept at a non-disruptive service for the customers. Partnerships with telecom industries could also be a great opportunity for Netflix to enable its subscribers to stream their movies directly from their TVs (without the need of an additional set-up box, hard drive or cable).
DVDs will still have a certain market share due to the non-technological savvy population around for some time, and areas lacking internet penetration. However, once these problems are resolved, will the DVD become a fossil, a relique of the BN era (Before Netflix)?