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Comment by Retric | Hacker News Reader

Netflix went from legal access to any DVD produced, too needing content deals with the entertainment industry and making their own content. The technical difficulties are minor by comparison.

That’s generally what pivoting means, going from chemical to digital cameras for example is a similarly huge jump even if the customers largely stay the same you lost a huge revenue stream from selling and or processing film and now need to spend a lot more on R&D.

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Changing from film cameras to digital ones is exactly the sort of thing I wouldn’t call a pivot. Many of the components and skills are identical, but you are adding sensors and storage. That’s just the sort of adaption to an evolving market that any reasonable company should do.

A pivot suggests a sudden and radical change in course. Slack feels like one, companies that have switched from manufacturing to (apparently unrelated) software feel even more so.

I’d also say Nokia doesn’t feel like a pivot. They were a company that did anything internally for which they did not find adequate solutions on the market. They produced a lot of different things over the decades and the radio business is one that found external success and grew over time. Do we consider large conglomerates to have repeatedly pivoted as different portions of their business waxed and waned?

A pivot is mostly a question of abandoning the old model efficiently rather than simply starting to do something else. Kodak was mostly a chemical company, selling film every week and a new camera every decade.

Going from manufacturing pencils to building aircraft doesn’t make use of existing workforce, equipment, or customers so why not just expand into a new industry and keep the old one as long as it was possible? Netflix or digital cameras on the other hand eats into their customer base. Someone buying a digital cameras is no longer buying film from you, it’s a destructive transition.

You're still selling movies and cameras.

If we take this approach EVERYBODY has pivoted. Walmart has online sales that are "eating into" their in store sales. CVS has home delivery, eating into their foot traffic...

Kodak actually pivoted to making pharmaceuticals. That leveraged what they where actually good at, high precision chemical manufacturing.

Survivorship bias means you see a lot of company’s that have successfully pivoted, and the brands that failed often get bought up after the fact.

I think Netflix is more of an argument than Kodak. Netflix kept selling access to movies, though the way they did so changed dramatically.

But while Kodak did sell cameras, Kodak sold cameras mostly to drive sales of their film. The film and chemicals were their high margin product ranges.

The pivot to try to drive their earnings mainly from their cameras was a fundamental change of business model in a way that Netflix shift to streaming (or Walmart or CVS online and delivery) wasn't. It turned a long term recurring high-margin revenue stream into a punctuated low-margin revenue stream. (not that they could have prevented the eventual collapse of their film business)

> You're still selling movies and cameras.

That doesn't matter, the organization is the people in it, if you have to make huge reorganizations in what the people at your company do then that is a huge pivot that is dangerous and likely to fail. Digital companies are not like other companies, you are thinking of companies where brands is the main thing and you can just slap together a new product in a year. It doesn't work like that in normal businesses, Kodak couldn't just say that all their factories specialized on making goods related to old cameras be repurposed to digital cameras.

Some of the expertise can transfer over, but if that is not your competitive advantage it doesn't matter. Kodaks competitive advantage was not camera lenses etc, so they had no way to pivot to digital cameras. Digital cameras destroyed the business they were good at.

> If we take this approach EVERYBODY has pivoted. Walmart has online sales that are "eating into" their in store sales. CVS has home delivery, eating into their foot traffic...

No, not everybody has pivoted. Lots of companies failed to pivot and died. Walmart is aware of this and has started to build expertise around digital sales already, because Walmart doesn't want to die in case digital sales overtakes physical sales.

The key pivot was not changing from film cameras to digital cameras, where indeed many components and skills are identical, but from film business (the majority of which is/was film and development process/chemistry/equipment/services, not cameras) to a camera-only business. Some companies did that pivot, some (like Kodak) did not.

Kodak was never known for good cameras. That was cannon and Nikon who both pivoted to digital. Kodak made great film and didn't have a simple pivot in pictures. Their simple pivot was pharmaceuticals which as others noted they did do.

Nokia climbed up the value chain in their vertical. From telephone cable into PCM line concentrators. From those into small exchanges. Then to the DX-200 digital telephone exchange. They merged/bought Televa (small exchanges and Gen0 Cellphones) and bought out Salora from Mobira (Gen0 cellphones and commercial radios). When Gen1 NMT became a thing they started making phones for it and later basestations. With GSM (Gen2) they ware making basestations and handsets from day one.

And they still make basestations and exchanges to this day. So they kainda are at their roots.

Nokia started as a paper mill taking advantage of hydropower, then after starting to generate electricity they combined with a rubber company and started working on cables. They seem like a pretty good example of pivoting even if they aren't as visible in consumer electronics as they used to be.

But it's obviously a lesser degree of pivot than a pivot that discards your current customer base. I also wouldn't be surprised if being a huge buyer of wholesale DVDs got them good contacts in the media/film industry.

Also, the transition from film to digital was more gradual than it appears, as many features now thought of as digital-only were actually available on late generation film cameras.

I'd agree that if you're 1) delivering the same promise to the 2) same customer base -- yes, it isn't as big of a pivot and some of the other companies on the list.

> “The technical difficulties are minor by comparison.”

You mean serving video to a pc? Because I also think about the infrastructure/last mile. And it’s one thing to have 10000 customers and quite another to have 10000000 (or whatever #)

Didn’t they still need to workout deals or licenses with the entertainment industry to rent out the DVDs? Didn’t Blockbuster have to do that to provide VHS and DVDs in the store?

I still think it was a pivot but not for that reason. Evolving can still be pivoting. Netflix shifted their business from providing physical media to streaming media.

No, definitely not, in the US anyone can rent out any physical media legally without any permission from the anyone due to the first sale doctrine. Same as me freely selling or loaning my DVDs and books without asking anyone first.

Before Blockbuster/Hollywood Video came to my town there were dozens of the video rental stores, all of which were mom-and-pop operations.

Nintendo tried to stop video game rentals during the NES era but failed - there was legislation banning video game rentals that was not passed and then they sued blockbuster for making photocopies of their manuals. I think I remember reading that rental stores having to send multiple employees into multiple stores to purchase Nintendo games because Nintendo had an agreement with retailers not to sell multiple copies of the same game to a single person to discourage rental and reseller purchases.

While legally you are correct, you want to make deals anyway, if you do you can get plenty of DVDs in on release day (they might sit in your backroom for a few days to ensure it was shipped fast enough). There are other things you can get in a deal if you make one.

See also: compulsory licensing for music. You don't need the permission of the copyright holder, but licensing deals are usually cheaper than the rate set by law.

https://en.wikipedia.org/wiki/Compulsory_license#United_Stat...

Not quite accurate. If you become a distributor of content, then you fall under the rules for distributors.

That's (part of) why videos typically had that "not for rent" / "only for home viewing" stuff. There's a difference between you lending or renting out a dvd once, versus this being a business model.

How this works out exactly in a US legal context, you ask? Well: always follow legal advice from strangers on the Internet. Also IANAL.

The content delivery aspect that Netflix coordinated with ISP's was a pretty phenomenal technical feat, and could be seen as a pivot into networking at scale.

Netflix still runs the DVD service.

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