They call it "Cannibalize" and not "Take it out behind the woodshed to be shot" for a reason

The image, culturally insensitive as it may be, drawn to mind when one thinks of "cannibals" is of some poor colonial explorer, tied to a spit and being slowly roasted alive. The key word here is - SLOWLY.The reason we refer to a company chipping away at it's own core market as "cannibalizing" is because of this issue of speed. When something is big and fast and sudden, there are other terms for it:

  • game-changer
  • revolution
  • (something)-killer
  • paradigm-shifting
  • etc

The key problem with the Netflix/Qwickster maelstrom is that someone got a bit confused. They were worried about the cannibals and chose to shoot the poor explorer. And along with the explorer, they also chose to shoot the horse he rode in on.

I've had a Netflix account since before September 11th. It was a brilliant concept at just the right time. The world wouldn't be ready for internet-delivered digital video for a decade (or 5 years if you are not in the USA) and the heavy, bulky, prone to failure VHS had been given it's marching orders. These small spinning discs could fit in an (oversized) envelope and come right to your door, AND you could get as many as you could watch. And one thing that made it more in line with the TiVo's of the world than the Blockbusters was the recommendation system. Tell it how much you liked a film, it could tell you how likely you were to like others. For more than a decade, Netflix happily recommended movies and I watched a ton of stuff I never would have seen because of it.

Add to this formula the instant gratification of watching it RIGHT NOW over the internet and geeks (myself included) were in 7th heaven. The same recommendations, a slightly lower audio and video quality (yes, I still preferred blu-ray), but you can put a lot of value on not having to wait. It was the complete package. For TV shows and "oh yeah, I did want to see that" movies, I could stream them. For the really good stuff, I could wait for the 1080p 7.1 DTS Master Audio spinning disc (minus special features of course - stupid). But they say, when you are on top, you only have one way to go.

Reed Hastings stated in his blog that "companies rarely die from moving too fast" and this may be true. But is death the only option? Netflix, the one stop shop and "complete package" has chosen to split that package up. Where once there stood the (mostly) undisputed champion of home video viewing, there now stand two... somethings? One is the Netflix of yore, but under a name only a pothead could love. The other is Netflix 2.0, all streaming all the time (but no, we don't have that). The truth is, neither is a service I would sign up for today by itself, but for the moment, I have both.

So which of these two "less valuable than the whole" services will get my viewing history? Which one gets my preferences moving forward? My viewing future? The unfortunately truth is that when you're busy "not dying by moving too fast", you sometimes miss things like this.

For an idea how to handle the "cannibalization" concept correctly, take a look at the iPod business. No seriously, take a look at it. It's still there. There's 3 completely different models still (not counting the iOS-based touch). They are still being sold by Apple and they are still called iPods (not podsters, and not being sold by a wholly owned subsidiary). Despite the fact that the good money is on iOS based phones, pods and pads moving forward, the iPod business is the quintessential "cannibalization" strategy. You replace something that was working great with something that still works, but better (even if it's in different ways). The cannibalization comes from the fact that it's still made by you and you can let the old product die on YOUR terms. Taking something that's working great, splitting it up into two things that work way less great and calling it innovation is something very different.

How this Netflix/Qwickster thing will ultimately shake out is yet to be seen. Maybe both services will stick around. But even if they do, both will just be a shadow of what they were when they were still together.

When iterative development goes wrong - the new

Iteration.It is, in many ways, the lifeblood of software development.  It tends to be understood these days that, once you release a product, your next step is to start working on version 2 immediately.  The goal is usually to take what you've done, see what's working and what's not, learn from it, and iterate.  Take out the stuff people don't like, add in new stuff that they will.  This doesn't happen only in software either.  The iPhone is a great example of iterative development.  Each new iPhone has added things to the equation driving people to a new version.  Even if they were happy with the one they have, the new iteration often has enough value to convince people to upgrade.

It is rare but possible that the "next iteration" could abandon a current product for something better, but completely different.  Apple has done this many times with varying degrees of success.  The example of success came when, at the height of it's popularity, they end-of-lifed the iPod mini only to replace it with the iPod nano.  The new version was, at it's heart, still a small iPod but the form factor changed (it got thinner and lighter) and the internal tech also changed (it went from a mini hard disc drive to flash memory).  It was a resounding success, but a step many in the tech world would have been afraid to try.

The less-than-successful example was iMovie '08.  After bringing dead simple home movie editing to the masses with the timeline based iMovie, and iterating it for several popular versions, Apple chose to move consumer video editing to a completely different paradigm.  I'm not going to discuss the merits of the new approach (I hated it with a passion at first) but the fallout was a perfect example of what happens when you rock the boat just a bit too much.  The people revolted and apple was forced to keep iMovie 6 available as a download to appease those who just didn't dig the new paradigm.

So into which of these examples does the new fall?  If you ask me (and a lot of other people) it falls squarely into the latter.  Digg is trying to remake itself into a "social news" site, and while that may be a nobel goal for Digg as a company, the problem is that they are doing it at the expense of what Digg truly is - a crowdsourced news aggregation service.  While there are, I'm sure, a lot of users who will gravitate to the new features like following the Diggs of friends (I have none on Digg) or following certain news sources (I don't), it shocks me that Digg has so completely misread it's core functionality.  But more important than misreading it, they've apparently abandoned it.

Here's how I used Digg-

  • first thing in the morning, load
  • scan down the page, looking for articles that interest me
  • middle click to open links in background tabs
  • arrive at headlines I've already seen several pages in
  • start reading the articles in the tabs
  • once done, head back to the front page to see if anything new has come along
  • repeat throughout the day.

This use case is, unfortunately, no longer a viable way to use the service.  For one, the new web 2.0, "load the next page below the current page" makes the entire site essentially one big page.  How do I get to page 4 quickly without loading pages 1-3 first?  you can't.  For two, there seem to be far fewer, and far less interesting stories making to the front page now, which is, BTW, no longer the front page. If you are logged in, the front page is actually your new social news page. Confused yet?  I am.  What was a useful tool for quickly finding the latest "popular" news is now apparently a tool about popularity that might contain news.  Maybe.

So what does a company do when the iterative process goes so wrong?  From the Apple example, maybe digg will come around in the next week or so and offer a way to switch the view you get when logged in, allowing users to "just read the news" which is all I really want.  However, since the news that appears on Digg is user driven, the ultimate danger is that this disruptive moment has driven enough users away that the new Digg can never become what the old Digg was.

I won't begin to speculate as to what research was done before making such a big transition.  I also don't fault Digg for trying something new.  Innovation is a great thing.  But if ebay closed up shop tomorrow and reopened as myspace, users would be generally confused.  The problem comes from abandoning the core function to attempt to create a new core.  If the risk pays off, you can be selling iPod nanos.  If it doesn't, you're stuck with iMovie '08.

So how's reddit doing?