Book review: “Powerful”

“Radical honesty” is easier said than done. In her latest book “Powerful; Building a Culture of Freedom and Responsibility”, former Netflix’ Chief Talent Officer Patty McCord delivers a great plea for the importance and benefits of a culture of “radical honesty”, one of the many things McCord helped put in practice whilst at Netflix. This element of always speaking the truth is one of the tenets of the Netflix culture which McCord was instrumental in shaping and which she writes about in “Powerful”.

McCord looks back on the Netflix culture as one of freedom and responsibility, and describes Netflix’ approach to creating “the leanest processes possible” and “a strong culture of discipline.” I’m keen to unpick the main elements of Netflix’ culture and McCord’s approach to co-creating a ‘powerful’ culture:

  1. Transform organisational culture – McCord outlines where to start with transforming organisational culture: “identifying behaviours that you would like to see become consistent practices (…) then instilling the discipline of actually doing them.” This is very much an evolutionary process, consisting of lots of small steps. The book lists the core set of practices that underpinned the Netflix culture McCord co-created (see Fig. 1 below).
  2. Great teams contribute to success – McCord singles out contribution to success as the greatest motivation for the majority of people and teams. She talks about the energy teams get from meeting a challenge and states “great teams are made when things are hard.”
  3. Hire ‘high performers’ only (1) – My simple adage when recruiting is that if I’m not sure about a candidate or if I / we feel a persistent doubt about the candidate, it’s probably best to refrain from hiring that person. McCord goes one step further by saying that one should only hire high performers; people who do great work and challenge each other. This made me wonder whether this introduces a barrier to entry for less experienced or more junior hires? These people might become very good at their job and will – eventually – benefit from an environment that is both challenging as well as supportive.
  4. Hire ‘high performers’ only (2) – McCord’s point about the importance of “having a great person in every single position on the team”, and how this makes for a highly performant team, reminded me of Steve Jobs’ famous quote. “A players hire A players, but B players hire C players and C players hire D players. It doesn’t take long to get to Z players. The trickle down effect causes bozo explosions in companies.” Perhaps it’s because I don’t know the exact traits of an A player and how to best look out for them, but I struggle with the A player concept. As a result, I felt that the makeup of great teams was the least convincing aspect of McCord’s book. I wondered what McCord make of some of the thinking by Andy Rachleff, a well-known VC and founder, who argues that “when a lousy team meets a great market, the market wins.”
  5. Treat people like adults – McCord also makes the point that we should treat all employees like adults. I know this sounds obvious, but I’ve seen plenty of environments where people aren’t being treated as such. At Netflix, McCord and her colleagues got rid of a whole lot of process, and instead relied much more on people’s own good judgment. For instance, at Netflix they stopped onerous processes such as annual budget and roadmap planning. This introduces a large dose of “trust” into the mix which I believe is invaluable for any business or team.
  6. People don’t want to be entertained at work; they want to learn – McCord’s makes a point about how employees want to learn things at work; they want to solve problems and deal with challenges. Instead of employees spending a lot of time away from their jobs for off-sites or formal training classes, McCord argues, employees benefit from truly learning on the job. She also covers the importance of all employees fully understanding how the business works; this being “the rocket fuel of high performance and lifelong learning.”
  7. Radical honesty (1) – As mentioned above, “radical honesty” plays a key role in Netflix’ company culture. Whether it’s about telling the truth about the company (e.g. its challenges, problems, etc.) or to each other, it’s important that the truth is being shared at any given time. For example, McCord encourages people to be fully transparent about their decisions and where they went wrong.
  8. Radical honesty (2) – The power of asking questions is another important hallmark of the Netflix culture of freedom and responsibility which McCord describes. At Netflix, people were taught to ask questions such as “how do you know that’s true?” or “can you help me understand what leads you to believe that’s true?” People thus learned first hand about what McCord refers to as “the ethic of asking”.
  9. People have power, don’t take it away – McCord dismisses any talk of empowering people. Instead, she argues that people have power and companies shouldn’t take that power away from them. The company’s job isn’t to empower people; companies need to make sure all conditions are in place for people to exercise their power. As a business leader, McCord explains, your job is “to create great teams that do amazing work on time.” She mentions the importance of great leaders ability to spot people’s growth potential and to nurture this potential.
  10. Build the company now that you want to be then – When recruiting people, McCord advises company to focus on future, as opposed to just hiring for the here and now. Can the people you’ve got in your team now do the job at scale? Are you going to need them to do tomorrow the same job they’re doing now? What’s your plan for them? McCord shares a “fast-forward six months forward” exercise which she uses to shape teams for the future of the company (see Fig. 2 below).

Main learning point: I can see how some of the elements that McCord describe describes in “Powerful” might not be applicable to all companies or to specific challenges that readers might be facing. However, I believe that we can all learn from the underlying mindset which McCord describes in her book; whether it’s the importance of ‘radical honesty’ or letting people exercise their power.

 

Fig. 1 – Core set of practices that underpinned the Netflix culture – Taken from: Patty McCord, “Powerful: Building a Culture of Freedom and Responsibility”

  • Open, clear and constant communication: across the entire company about the work to be done and challenges being faced.
  • Radical honesty: telling one another, and management, the truth in a timely fashion and ideally face to face.
  • Debating based on fact based opinions: at Netflix, employees are expected to have strong, fact based opinions and to debate them avidly and test them rigidly.
  • Customer and company first: people to base their actions on what’s best for the customer and the company, not on attempts to prove themselves right.
  • Preparing teams for the future: hiring managers take the lead in preparing their teams for the future by making sure they’ve got high performers with the right skills in every position.

Fig. 2 – “Fast-forward six months” exercise –  Taken from: Patty McCord, “Powerful: Building a Culture of Freedom and Responsibility”

  • Imagine six months from now, you have the most amazing team you ever assembled and you’re saying to yourself, “Wow, those guys are awesome! I can’t believe what they’re accomplishing.”
  • First write down what the team will be accomplishing six months from now that it’s not accomplishing now. now. Use all the figures you want.
  • For those different things to be happening, what would people need to know how to do? What kind of skills and experience would it take for the team to operate the way you’re envisioning and accomplish he the things you’ll need to do in that future?

 

Related links for further learning:

  1. https://jobs.netflix.com/culture
  2. https://www.slideshare.net/reed2001/culture-1798664
  3. http://pattymccord.com/netflixs-patty-mccord-on-being-a-great-place-to-be-from-protect-the-hustle-ep-1/
  4. https://visualsynopsis.com/uncategorized/powerful-by-patty-mccord/
  5. http://firstround.com/review/this-is-how-coursera-competes-against-google-and-facebook-for-the-best-talent/
  6. https://recruitloop.com/blog/steve-jobs-top-hiring-tip-hire-the-best/
  7. https://daedtech.com/a-players-dont-hire-a-players-they-partner-with-a-players/
  8. http://web.stanford.edu/class/ee204/ProductMarketFit.html
  9. https://medium.com/parsa-vc/7-lessons-from-andy-rachleff-on-product-market-fit-9fc5eceb4432

 

How supermarkets are becoming entertainment platforms

Over the past year or so supermarket giants such as Sainsbury’s and Tesco have started venturing into entertainment content. A good example is supermarket giant Tesco which acquired We7 (digital music) and Blinkbox (video on demand) last year. Its UK competitor Sainsbury bought online entertainment platform Global Media Vault and Anobii (eBooks) around the same time.

I wondered about the business rationale and aspirations that underpin these deals. Do supermarkets want to bolster their physical presence with an equally comprehensive digital offering? Are Tesco and Sainsbury’s looking to take on global content providers such as Amazon, iTunes and Netflix? What’s in it for these supermarkets?

For the purpose of this blog post I’ll focus primarily on video streaming, outlining the key characteristics of this offering and user demands. Let’s start by looking into some of the relevant factors with regard to building a digital video platform:

  1. What does the user want? – From my market research and conversations with consumers, I believe that users are primarily interested in quality content which is easy to access, engaging and – ideally – free. They want to watch TV shows or films across a wide range of devices, with the the experience being as ‘seamless’ as possible. “It just needs to work” is a sentiment that I’ve heard echoed by numerous people, meaning that they don’t have much time for technical glitches, issues when watching content offline or on multiple devices. The average video on-demand customer wants to be in full control of what they watch, when and where. Also the breadth of the catalogue is just as critical a factor; the sooner a service can offer the latest, popular TV shows or movies the better. An interesting development in this respect is Netflix creating its own “House of Cards” series and offering this exclusively to its subscribers. 
  2. What does the business want? (1) – Revenue. User data. Cross-selling. Forgive me for the crude breakdown of these high-level objectives, no doubt the detail behind their business models is probably more refined than that. I’ve tried to break this down a bit more in Fig. 1 below. For a platform like Tesco’s Clubcard TV (powered by Blinkbox) the main revenue source is likely to be advertising. However, just as important is the value the supermarket colossus derives from offering their users an additional, free service and the ability to learn more about their entertainment preferences. Understanding those preferences better will no doubt help in recommending users other content or entertainment related products. I’ve outlined some relevant metrics to determine the customer value in Fig. 2 and 3 below.
  3. What does the business want? (2) – Engaged customers, brand advocates. Perhaps less easy to quantify but not an insignificant factor in this context. It’s much easier to go to another supermarket if they offer the same packet of crisps at a cheaper price. However, if a supermarket offers their loyal customers great free content, you might think twice before switching your ‘allegiance’. There’s still some debate about how successful Netflix’ House of Cards series has been so far in terms of views and subscription increases, but there’s no denying that the programme got people talking and engaged.

Main learning point: previously I had looked at the business models for video on demand providers such as Lovefilm and Netflix. Their subscription based models were relatively easy to work out. With a supermarket chain like Tesco offering free content to its loyal customers, the proposition gets very interesting. It seems like a very effective way to engage with customers, offering them free but compelling content. Similar to the paid versions of on-demand video, I believe that a free content offering will have a bigger chance of success if it provides great content and if it’s easy to access across a range of devices.

Fig. 1 – Breakdown of key players in the video streaming space and their business models

A. Subscription model / Pay-as-you-go

Key players: Netflix, Amazon (Lovefilm/Amazon Instant Video), Apple, Blinkbox and Walmart (Vudu – US)

Key value proposition: Offering quality content and a great – cross-platform – user experience

Business model: Either a monthly subscription fee or pay-as-you-go rental

B. Advertising

Key players: YouTube. BBC iPlayer, Channel 4 VOD, Hulu (US), Tesco Clubcard TV, WatchFreeMovies and Zmovie

Key value proposition: Offering quality content for free and a seamless – cross-platform – user experience

Business model: Free access, no fees required. Use free-access model to attract users to other (premium) content services. Advertising as a main revenue source.

Fig. 2 – Four ways visitors of media sites can generate value (adapted from “Lean Analytics” by Alistair Croll and Ben Yoskovitz, p. 121)

  • Subscriptions – Measure subscription rate to monitor subscription revenue
  • On-site engagement – You can look at a number of engagement metrics (e.g. time since last visit, time per visit, visits per day, pages per visit and time on page)
  • Ad-revenue – Generate revenue through display ads (number of impressions x cost per impression = Cost Per Engagement), affiliate links (affiliate % x sales volume = Affiliate Revenue), sponsorship (e.g. monthly sponsorship rates and number of sponsored banners) and Pay Per Click (Click-through rate x Ad price = Pay Per Click revenue)
  • Sharing –  Generate value through sharing content (e.g. through on-site tools and off-site)

Fig. 3 – Key metrics that media sites are likely to care about (adapted from “Lean Analytics” by Alistair Croll and Ben Yoskovitz, p. 117)

  • Audience and churn  Understanding how many (paid) users you’re adding and losing. For services like Netflix and Blinkbox ‘user loyalty’ is a critical aspect
  • Ad rates or Cost per engagement –  How much money can a service make from impressions based on the content it covers and the people who use the service
  • Ad inventory – The number of impressions that can be monetized
  • Click-through rates – How many of the impressions actually turn into money
  • Content/advertising balance – The balance of ad inventory rates and content that maximizes overall performance

clubcard_tv_contentfullwidth

Related links for further learning:

  1. http://www.walmart.com/cp/vudu/1066144
  2. http://www.walmart.com/cp/Video-On-Demand-by-VUDU/1084447
  3. http://www.vudu.com/
  4. http://crave.cnet.co.uk/homecinema/tescos-free-clubcard-tv-service-has-some-right-old-tosh-50010826/
  5. http://blog.laptopmag.com/walmart-launches-vudu-video-on-demand-service
  6. http://money.cnn.com/2011/07/26/news/companies/walmart_vudu_online_movie_service/index.htm
  7. http://techcrunch.com/2013/01/07/walmart-vudu-disc-to-digital/
  8. http://techcrunch.com/2011/07/26/walmart-vudu-movie-streaming/
  9. http://www.fool.com/investing/general/2013/05/15/can-netflix-out-stream-the-competition.aspx
  10. http://appadvice.com/appnn/2013/05/when-it-comes-to-streaming-video-netflix-and-youtube-continue-to-lead
  11. http://www.allmyfaves.com/blog/movies/watch-movies-online-top-10-film-streaming-review-sites/
  12. http://voyager8.blogspot.co.uk/2010/02/what-are-cpm-cpc-cpa-cpe-etc-in-online.html
  13. http://thenextweb.com/uk/2013/04/03/tesco-brings-bbc-worldwide-content-to-its-blinkbox-powered-video-streaming-service-clubcard-tv/
  14. http://www.bbc.co.uk/programmes/p01b1hyh
  15. http://www.pocket-lint.com/news/121318-tesco-clubcard-tv-adds-itv-dramas-and-cooking-shows-to-free-streaming-service

Fanhattan: cool name, but how does it work?

Intrigued by its cool sounding name, I wanted to find out more about Fanhattan. I then came across this demo by one of the founders of the service, which has been going for about a year now. In this demo, Gilles BianRosa (CEO) made it clear that Fanhattan is all about content and not about the individual apps that host films or TV shows.

As BianRosa explained, for the Fanhattan user it’s most and foremost about “what do I want to watch?” This means that as a user I will look for the content first and Fanhattan will subsequently present me with a range of services where I can access this content (think Netflix, iTunes and Amazon).

These are the main things that I learned about Fanhattan:

  1. It acts as a ‘content gateway’ – Rather than having to go into a specific app or service, Fanhattan enables you to look for the content you want to watch, after which it will let you know through which services you can access this content. The app is built in HTML5 which means it will fully support rich media like audio and video.
  2. It offers content in the broadest sense of the word – It’s a shame Fanhattan isn’t available in the UK yet, because I would love to have a closer look at all the features Fanhattan displays around a specific piece of content. Call me a geek but I would be very interested in seeing up close how Fanhattan display products or data related to “The Godfather” such as merchandising, the movie soundtrack, PG ratings, similar films recommendations and film info.
  3. It has a clear social element – As we know, digital content lends itself incredibly well to sharing with your friends and to friend recommendations. Fanhattan taps into this social discovery element by enabling its users to build a Taste Profile with the content they have watched, which they can easily share with friends. Similarly, if you like a film or TV show on Fanhattan this will automatically appear on your Facebook wall.
  4. It’s cross-platform – Being available on a number of platforms sounds like a no-brainer but Fanhattan has been following a (in my mind sensible) phased approach to rolling out on different platforms, with the iPhone being the latest addition. I understand that TV and game consoles are next on Fanhattan’s product roadmap.
  5. It’s cloud based – Because the content discovery element of Fanhattan is happening in the cloud, it should increase Fanhattan’s flexibility in displaying and storing (discovery) data and content.
  6. It has a flexible model – Users can either subscribe to Fanhattan (like you do for services like Spotify or Rdio) or pay Fanhattan for each transaction separately. It’s a shame no figures are publicly available on the uptake of Fanhattan as a subscription service vs. users paying for content on an ad-hoc basis.
Main learning point: I do see apps like Fanhattan playing an important role in the discovery of new content, acting as a user-friendly portal to a wide range of content-oriented services. At present, Fanhattan isn’t available in the UK; I’ll be keeping an eye out for Fanhattan or similar services rolling out on these shores. Will users warm up to the idea that you can use a single service to access the content? Will they move away from the likes of Lovefilm, Netflix or Amazon in favour of Fanhattan or a Spotify-like service focused on films/TV shows?

Related links for further learning: 

http://blog.fanhattan.com/2011/09/13/social-discovery-and-the-power-of-vudu/

http://techcrunch.com/2011/11/16/fanhattan-tv-discovery-app-migrates-to-the-iphone/

http://gigaom.com/video/fanhattan-takes-content-discovery-to-the-cloud/

http://news.cnet.com/8301-17938_105-20025825-1.html

Learning more about streaming, this time it’s about Netflix (again)

Over the past few months I’ve been learning more about streaming, trying to understand beter how it works and who operates in this market (think Spotify, Rdio and LoveFilm). A logical next step was trying to get a better grasp on the business side of things; what makes streaming so interesting from a business revenue point of view?

  1. Increase in number of streaming subscribers – In a recent webcast with TechCrunch Netflix’ CEO Reed Hastings made it clear where he sees the future of his business by stating that “We expect DVD Subscribers to decline every quarter … forever.” He illustrated this by stating that Netflix had lost 2.76m DVD rental subscribers in Q4 of 2011 whilst its streaming service gained 220k users.
  2. Low cost model – In the same webcast, Hastings explained that even though the margins on DVD rental are much higher compared to streaming (since prices of DVD rental are higher), the variable cost attributed to streaming are much lower.

This made me think about the following:

  1. Will streaming cost really be that low? – I can understand that the variable cost involved in streaming are likely to be significantly lower than DVD rental. The fixed cost of streaming are, however, much higher compared to other (subscription) models. I’m thinking of the fixed costs to set up a streaming infrastructure (e.g. enabling users to stream both in an online and offline mode) but particularly the cost of securing streaming content. With Netflix and LoveFilm battling it out to bolster their catalogues of streaming content in the UK I can imagine the big film studios and TV production companies rubbing their hands with glee and driving up the price of their content.
  2. Will streaming really take off? I guess this will very much depend on factors such as cost, consumers choosing between downloading and streaming (between access and ownership) etcStreaming is a relatively new model, so it will be interesting to see what its consumer adoption will be like.

Related links for further learning:

http://techcrunch.com/2012/01/25/reed-hastings-we-expect-dvd-subscribers-to-decline-every-quarter-forever/

http://news.cnet.com/8301-17938_105-20093587-1/netflix-vs-blockbuster-whats-the-best-service-for-streaming-and-dvds/

http://mashable.com/2011/12/06/verizon-netflix/

http://paidcontent.co.uk/article/419-interview-netflixs-hastings-aims-to-challenge-bskyb

http://paidcontent.co.uk/article/419-netflix-sees-overseas-losses-doubling-to-118-million-this-quarter/

http://paidcontent.co.uk/article/419-lovefilm-adding-abc-tv-show-archive-in-uk-netflix-fight/

How robust will Netflix’ business model turn out to be? – Part 3

Just as I thought that the Netflix saga had come to an end with my blog post a few weeks ago (in which I wrote about Nextflix’ CEO Reed Hastings’ announcement to split the business into two separate units), the story has taken another twist. Last week, Netflix reversed its decision to split its business into two parts, streaming (Netflix) and DVD rental (Qwikster) and became a single unit again.

In a very succinct blog post, CEO Reed Hastings wrote: “It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs” but he did not offer any further explanations as to his reasons why.

What could those reasons be? Let me just speculate for a minute:

  1. Reed Hastings is speaking the truth – Netflix users genuinely struggled to have to use two different sites. Call me cynical, but surely a problem of this nature would have come to light in early stage user testing or forum groups?
  2. Too much change in one go – Perhaps the pace with which Hastings wanted to introduce business change was simply too high for most Netflix users. An official Netflix statement read: “We underestimated the appeal of the single Web site and a single service.” Nevertheless, make no mistake, online streaming does remain Netflix’ core focus going forward, despite this retracted spin-off.
  3. Unexpected amount of “churn” – The number of people who terminated their Netflix subscription as a direct result of the announced split was simply too high and was putting the overall business revenue at risk. I’m not sure if this was the case, but Netflix users still got a shock when Netflix was unified again, whilst keeping two separate price schemes for DVD rental and streaming respectively.

Main learning point: even though Netflix and its CEO were halted in their tracks to split up the business, there’s no doubt that Netflix strategic focus will be on streaming in the years to come. I’m sure that when the time is right (and Netlix’ users are ready) Netflix will spin off its DVD rental business and concentrate solely on online content streaming.

Related links for further learning:

http://mediadecoder.blogs.nytimes.com/2011/10/10/netflix-abandons-plan-to-rent-dvds-on-qwikster/?scp=2&sq=netflix&st=cse

http://www.youtube.com/user/JeffreyHayzlett?feature=mhee

http://www.adweek.com/news/technology/netflix-reverses-its-qwikster-rebranding-135673

http://www.cnbc.com/id/44851424

http://mediadecoder.blogs.nytimes.com/2011/10/10/netflix-abandons-plan-to-rent-dvds-on-qwikster/ 

http://news.cnet.com/8301-31001_3-20118063-261/qwikster-nixed-netflix-catches-some-flak/

How robust will Netflix’ business model turn out to be? – Part 2

Back in February, I asked the question about the (long-term) sustainability of Netflix’ business model and I guess that some major events in Netflix’ life over the past week have provided some useful insights into answering that question:

  1. Splitting the company in two – On the Netflix blog, Netfox CEO Reed Hastings last week announced the split of the business into two separate parts. Netflix’ traditional DVD-by-mail business will be renamed Qwikster and the name Netflix will be retained for the company’s streaming activities.
  2. It’s not a spin-off – In his blog post, Hastings made it clear that both businesses remain part of the same company. However, Netflix has come to the realisation (albeit a bit slowly so it seems) that DVD-rental and streaming are two very different activities. Hastings explains: “So we realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently.”
  3. Different brands, charged separately – Netflix’ recent price hikes meaning that its customers now have to pay separately for streaming and DVD rental (as opposed to paying a ‘package price’) caused quite a massive uproar and a decrease in the number of Netflix subscribers (and a significant share price drop to boot). I guess Netflix execs must have felt that to fully justify this price increase it had to package up both products separately, each with their own website, mobile platform, etc.
  4. Streaming is the future – To me, this split clearly shows that Netflix sees online streaming of content as its future. In his blog post, Hastings acknowledges that the days of DVD rental are numbered: “DVD by mail may not last forever, but we want it to last as long as possible.” One can imagine that in the not so distant feature Netflix will sell its DVD rental business (or terminate, depending on customer demand) and concentrate solely on its streaming business instead.
  5. Will Lovefilm follow suit? – Lovefilm which recently got acquired by Amazon is increasingly focusing its efforts on streaming. The Lovefilm Player is a good example of this strategy, streaming video content directly to users’ TV sets or game consoles.
  6. Content streaming is the way to go – In the past few days the ‘new Netflix’ has been announcing a video-on-demand rights deal with major Hollywood studio DreamWorks to beef up its content portfolio. Not only is this a logical step in Netflix’ ongoing quest to stream content across multiple platforms, moves like this one are critical if Netflix wants to gain a strong foothold in the content streaming market.
Main learning point: when I wrote about Netflix a few months ago I couldn’t envisage that it was going to overhaul its business model and approach to market. Whether this move was made out of choice or forced upon Netflix following a massive PR disaster, the fact is that Netflix has made its strategic intentions very clear: the days of online DVD rental are numbered, streaming is the future!

 

Related links for further learning:

http://blog.netflix.com/2011/09/explanation-and-some-reflections.html

http://thenextweb.com/media/2011/09/16/netflix-its-not-about-the-price-its-about-the-lack-of-choice/

http://techcrunch.com/2011/09/18/netflix-qwikster/

http://www.engadget.com/2011/09/26/nyt-netflix-strikes-deal-with-dreamworks-will-begin-streaming/

http://www.businessinsider.com/netflix-splits-in-two-the-dvd-business-will-be-renamed-qwikster-2011-9

http://www.wallstreetdaily.com/2011/09/27/netflix-announces-deal-with-dreamworks/

http://multiplayerblog.mtv.com/2011/09/19/netflix-video-games-qwikster/

Amazon is really getting into interactive TV

Back in January, Amazon acquired Lovefilm to strengthen its position in the online video market. It has now bought Pushbutton a London-based digital agency specialised in interactive television content and services for new platforms such as Internet Protocol Television (IPTV), internet-enabled TV sets and tablets. Pushbutton counts the linkes of Sky, BBC, Virgin and Microsoft among its clients as well as Lovefilm, for which it has developed applications on Sony’s “Bravia” Internet-enabled TV range as well for the Playstation 3.

What does this acquisition tell us?

  1. It’s all about content – Like the acquisition of Lovefilm, Amazon’s focus is very much on finding lucrative content related opportunities. The increase in number of app-enabled TVs is such an opportunity.
  2. Bring on Netflix! With US online content behemoth Netflix looking to expand into Europe in 2012, Amazon (and Lovefilm) will need all the content firepower that they can get.
  3. The Amazon tablet? With Amazon rumoured to launch its own tablet computer later this year, this acquisition of Pushbutton will help Amazon design and develop user interfaces and experiences geared for tablets.

Main learning point: Amazon is clearly on a path to expand its content catalogue as much and as quickly as possibly. Acquisitions such as those of Lovefilm and Pushbutton do make a lot of sense in that context. Not only is Amazon extending its catalogue of online content, through Pushbutton it now also has the expertise available in-house to design and develop interactive experiences around that content.

Related links for further learning:

http://thenextweb.com/uk/2011/07/28/amazon-acquires-london-based-tv-app-company-pushbutton/

http://paidcontent.co.uk/article/419-amazon-buys-lovefilms-iptv-app-designer-pushbutton/

http://www.geekwire.com/2011/amazon-buys-pushbutton-adds-universal-movies