Every now and then, I talk about coopetition. It’s one of those words you might have to double-take, not sure if it’s a misspelling, and when you’re sure you’re read it right it can become a word that you think I’ve made up.
It’s not. Or at least there are a whole bunch of other people talking about coopetition. As you can see, we’ve just barely cracked the top 50 sites for “coopetition” in Search Engine Optimization results at Google:
But coopetition is very real. In fact, as the world shrinks and business changes, coopetition becomes a bit more real every day. Just Ask Netflix, or Redbox.
Through missteps at Netflix, like them acting like the old media companies Netflix is finding out are their coopetition, Netflix’ aborted plans to split into multiple business units and expand, or the mess that Blockbuster and Redbox find themselves in as they try to move forward in what’s becoming a dying business, coopetition has become the main business issue to be managed.
Time Warner, a very large media company, is trying to figure out how to do business with companies like Netflix and Redbox. In slogging through the issues that arise when you have multiple distribution channels with differing business models and a need to maintain relationships with the parties in all of them, Time Warner, like the other big media companies, is falling back on old ways: most-favored-nation status goes to movie theaters; they get movies first.
Makes sense, of course. If you can get $13 per viewing per person, wouldn’t you want to do that with as many people as possible before you dropped your price to $20 for a copy? And then wouldn’t you want to grab that $20 from as many people as possible before you allow the film to be rented for $4 or $5? Or in the case of Redbox, just over $1?
But by being relegated to the back of the queue, the Redboxes and Netflix of the world are put at a tremendous disadvantage.
In December, HBO (A Time Warner company) stopped selling DVDs to Netflix at a discount, because they didn’t like Netflix renting HBO-produced films while the movies were still in early release on HBO Television. So Netflix started buying them elsewhere at a slightly higher price. That impacts their bottom line, for sure, but way less than waiting for HBO to give Netflix permission to start distributing the films after millions of people have already seen them on TV. Now, Redbox is doing something similar with Warner Films; rather than wait two months after the retail release to start renting new DVDs, Redbox is forgoing the discount Warner offered them and will rent out the films as soon as they are available. Redbox just needs to buy their DVDs on the open market.
Coopetition. Tough sport. And you can’t play if you do business on the premise that “the way things have always worked will keep working”. Just ask HBO about their former media business partner, Louis CK.