Zillow’s recent pivot from a traditional agent ad model to its all-in, instant-offer business model reminds me of Netflix’s gutsy decision in 2007 to move into streaming and away from its profitable DVD-by-mail model.
For a decade, AT&T, Comcast, Disney and the rest of the cable and entertainment industry sat idly by as first Netflix, then Youtube and finally Amazon Prime Video ate their lunch. Stealing at-home entertainment eyeballs at a furious rate, the technology upstarts often used the distribution of the cable rulers and entertainment content from creators like Disney itself to build their massive businesses.
Sound familiar? Think of home listings on Zillow and Realtor.com as the Disney shows that are “streamed” on Netflix. I don’t mean that literally, but rather that the same forces that upended the TV industry are now making their way quickly to real estate.
Now, the old guard cable and entertainment companies must play serious catch up, jumping into the streaming business like a pack of wild dogs scrounging for a bone.
A few years behind can mean too far behind
Critics say they will not be serious competitors to the tech monsters, having waited too long and depending too much on archaic on-demand TV technology that works about as well as a boat without sails in the America’s Cup.
Plus, Youtube, Netflix and Amazon are creating their own content, mollifying threats from the entertainment conglomerates pulling their content from the online upstarts.
The traditional real estate companies have the same problem, as their destiny unfolds in an eerily similar fashion.
In a perfectly legal manner, Zillow used the industry’s listing content to build an unmatched consumer audience. And now it is using its powerful distribution to get into the transaction itself through its aggressive instant-offer roll out across the country. Think of that strategy as Netflix producing its own shows.
Goodbye DVDs, hello instant offers
Zillow’s recent pivot from a traditional agent ad model to it’s all-in instant offer business model reminds me of Netflix’s gutsy decision in 2007 to move into streaming and away from its profitable DVD-by-mail model.
The question now is when will the old guard real estate companies roll out something like the new streaming services of Disney and AT&T? And what would that look like?
To date, they have been hesitant about iBuying and instant offers. Time could be their worst enemy if Zillow, Opendoor and others build instant-offer brands that begin to dominate the homeselling market.
The real estate franchisors and larger brokerages lost the home search race many years ago. Now, they face a more daunting threat as the broker cooperation pact gives way to the fast and furious homebuying and selling proposition, which many consumers seem to love. Certainty trumps tradition.
Let’s call it streaming real estate
RE/MAX has said it’s not touching the iBuying business. Keller Williams is testing the idea, as is NRT. But none are putting serious capital or technology resources behind these experiments.
To defend their wait and see strategy, the criticisms have been trivial about what the consumer allegedly wants.
“This is like 1800-BuyUglyHouses”.
“What happens when the market turns?”
“Sellers are being ripped off.”
“Consumers are not in a hurry.”
True, not all home sellers will take this option. Just as in 2007-2009, most people panned video streaming. Most hung on to the tried and tested system of receiving that pretty red envelope in the mail. Now those old habits seem archaic — and they are. Those early Netflix envelopes? Collectables now.
The real estate industry has a choice, with time to be bold. Faced with disruption, timing is everything.
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