The reason that incumbents can’t react is that their revenue and defensibility are continued by serving the high-end of the market for which it would take too much time & money for any competitors to effectively challenge. In Netflix’s case this is their DVD distribution business. It’s hard to imagine somebody else being able to effectively compete with that.
But the real threat comes from the change in technologies that rule the old business obsolete. Streaming. It’s clear that in the future movies & TV will be delivered to our homes from the cloud. Indeed for many this is already the case.
To win the future he needs to attack his core assets by building new ones. Very few companies ever do this.
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