Who is The Target Audience?

You know, the whole "Netflix for books" idea got me thinking. Who would be you target audience? Readers?

No. Not even close.

Notice, lately, how Netflix has started clamping down on "heavy users"? Obviously, these people are costing them more money than they are worth in subscription fees. From the appropriate point of view, it seems only fair that heavy users of a system be "throttled back" to allow for everyone else to have a fair go.

But wasn't that the whole point of the Netflix service? That one customer would no longer block another? Wouldn't Netflix be able to warehouse hundreds of copies of each movie, and just post them out on demand?

Notice that nowhere does Netflix mention whether their customers would be throttled based on the type of movies they order. If their press release said "We'll be de-prioritising anyone who only orders new releases," then I'd be more inclined to believe their story. But no, they're simply concerned about the cost of postage. They could easily set up a system to pack and ship three movies a day to every customer, but their postage costs would go through the roof.

Cheap postage is one reason why the netflix system works; when I looked into a similar system for books here in Sydney the comparative cost of postage nearly gave me a heart attack. A single netflix-books subscriber, in Sydney, would effectively eat their subscription fee in postage just by ordering one single book (we may be the clever country, but if it weren't for email we'd also be the out-of-touch country).

This just highlights Netflix's main problem; to stay profitable they need to keep subscription fees higher than postage costs. You can do this by choosing your pricing structure, but you can also do this by choosing your customers.

People look at netflix and think "Wow, that's a fantastic service for movie lovers," and - technically - they'd be right. But Netflix doesn't want movie lovers as it's customers, they want people who like the idea of watching movies. These people would really order that many movies, but they like the idea that they could, if they wanted to. Many service-based products are like this; designed to promise you the world ("unlimited movie rentals every month!") but hoping that you'll slowly forget that you're even subscribed. Mobile phone companies took a long time to come around to the idea of actually encouraging people to make calls, since - for many years - the monthly line rental was reasonable but calls were prohibitively expensive. They didn't really want you to make calls, but they were happy to take your service fee.

Insurance companies don't want you to make a claim, internet companies don't want you to download, Dell customer support never wants to be called, even the Road Transport Authority doesn't actually want all those dirty, noisy cars on it's roads. Most of these organisations feel far better off when their customers never actually using their services, or use them only minimally. Many even bet their business model on it.

As to our Netflix-books service? The target audience is, of course, people who like the idea of books, and reading. People without the time, but with plenty of disposable income. The target audience is the most profitable one, and it's mostly made of people that never use the services they're sold.

Think about this next time you're shopping around for a service. If you're in the target audience, you probably don't need it.