Netflix plans for movie future

Very before long the ubiquitous red envelopes I receive in the mail containing my DVD selections for the month will have "Qwikster" written on them instead of "Netflix." This week, Netflix decided to split itself into two companies. The new company, Qwikster, will focus on the old business of renting DVDs by mail. The old company, Netflix, will focus on the new business of streaming media over the Internet.

Nevertheless, from a business point of view, Netflix has done the right thing. Focusing on streaming media is a forward-looking strategy. It was just poorly executed from a customer relations' point of view.

Nevertheless, movies on DVD are the equivalent of books in print: yesterday's innovation. As I wrote here a during ago concerning Borders' inability to adapt to the digital age, media companies that don't embrace disruptive change will not survive. Borders is gone. This week, one of the local Books-a-Million stores in Brevard announced it was closing.

Companies just as Netflix know research can change their business in an instant. Right now there's very little competition to the streaming content that Netflix offers. Apple, Amazon.com, Hulu, and even Walmart now offer videos online, nevertheless most of the videos are for rent or purchase. Even more, their catalogues are far smaller than Netflix's online library. Yet that will change, and Netflix knows it.

Scott Tilley is a professor of software engineering in the Department of Computer Sciences at Florida Tech in Melbourne. Send tech questions to technologytoday@srtilley.com. You can follow his column on Twitter @Tech TodayColumn.