Netflix Case Study Essay

The movie rental industry is a living industry; there are constant changes with advances in technology, rights management, and the slow, but steady, move away from physical Media. Companies such as Netflix, Hulu, RedBox, and Blockbuster are being forced to look at new business models and try to keep up with these changes.

Netflix was founded in 1997 with the intent to revolutionize the way in which consumers watch movies and television shows. Their accomplishments both in innovation and in customer base for their service indicate that the firm has been, and continues to be, successful in doing so. Currently, the

Netflix does not allow customers to watch all released movie on demand. There are some movie that customer cannot instantly watch. If Netflix developed streaming service and figure out a problem of coexisting between rentals and streaming service, Netflix can create competitive advantage.

The downturn of the economy has taken away many peoples disposable income and Netflix’s limited online library may have caused customers to question if it was worth it or not.

1. Netflix’s original marketing strategy offered several flat-rate monthly subscription options; in which, members could stream movies and shows via the Internet or have disks sent to their homes in a pre-paid and pre-addressed envelope. Free from the despair of due dates and late fees, members could keep, up to, eight movies at a time. Upon the return of a disk, Netflix would automatically mail out the next movie from the customer’s video queue. Members were able to change and update their queues as frequently as they liked. The sheer innovation of Netflix’s strategy encouraged several competitors to enter the market to compete directly,

It appears that Netflix has control over the vast majority of the movie rental business. Consumers are renting less than they used to and the convenience that Netflix incorporates into its service, such as online streaming and mail orders eliminates other competitors from considering entering the movie rental business.

A quick review of the process shows us that Netflix’s proprietary SCM software decides what movies are to be sent and where they are going to be sent to. How does this system add value to the company and is it necessary for them to operate? Well it starts adding value initially by reducing costs. When the company first started it had around 75,000 customers but required over 100 employees per distribution center in order to insure quick turnaround. Now with a customer base in the millions, distribution centers average around 45 employees (Cohen). This is due to the software allowing a lesser amount of people to handle a larger work load. According to Tom Dillon, lower costs translate to competitive

Entering and transforming the video rental industry was a large undertaking for the start-up company. The first marketing objective the company undertook was the process of building a brand. Netflix’s identity was crucial to future growth and success. Without a strong brand, competitors with deep pockets could have easily duplicated the company’s business model. Secondly, leveraging technology was critical to establishing the business and infrastructure growth. The consumer base was the final objective Netflix sought to achieve. Retaining and growing subscribers were fundamental to revenue and marketing goals.

Netflix, the online subscription-based DVD rental service aimed to better satisfy customer in a way competitors didn’t, customized and personalized service with unlimited monthly rentals from a great variety of film offerings. Now they want to leverage their strengths to enter into the Video on Demand market

To offer a wide selection of DVDs for its consumers, Netflix worked with more than 50 studios and distributors. Revenue sharing arrangements

Netflix exhibits dominant economic characteristics in the online movie rental business. They enjoy strong market size and growth rate when compared to rivalry competition. The number of rivalries are increasing, and the market remains dominated by only a few sizeable rivalries like Blockbuster Video, Wal-Mart, Walt Disney Movies and Movielink’s Downloadable Movies. Netflix is determined to offer new and innovative technology to sustain their competitive advantage.

Netflix was founded in 1997 on a platform that offered video rental by mail. Reed Hastings, the CEO, co-founded Netflix when he decided that he was sick of paying late fees from Blockbuster. Being a subscriber of Netflix at this time meant that you were able to order a video with one day delivery with no hassles of late fees. In 2007, Netflix expanded by providing online streaming of media such as TV shows and movies, while still providing their DVD by mail services which was what they were originally founded on. This broadened their customer base by providing to those who rather not wait a day for a DVD and just stream media over the internet.

Netflix was founded by technology enthusiasts and website developers Reed Hastings and Marc Rudolph back in 1997. Netflix originally started with a website to allow orders of DVD’s to be delivered to the home. The goal of the company was to provide a cheap and easy means of delivery of DVD’s to the consumer. As time moved on, Netflix went on to start streaming videos on their own platform and became an emerging power in the video streaming entertainment industry. According to Nasdaq’s website, Netflix became a publically traded company as “NFLX” on May 23rd, 2002. The IPO was worth $15.00 a share. (1) Now, Netflix (NFLX) according to

Netflix employs a subscription-based business model and subscribers can chose from a variety of subscription plans. The business model consists of two parts; the DVD-by-Mail option, and the streaming option, which launched in January 2007. Both options were bundled together until July 2011 when Reed Hastings announced the separation of the two services. Before the announcement Netflix recorded tremendous financial results, which increased significantly during 2010 and the first half of 2011. The number of domestic subscribers surged as well. However, the announcement of new pricing plans created negative consumer and investor reactions. As a

Netflix was founded by Reed Hastings and Marc Randolph in 1997 and was originally based out of Scotts Valley California. The business model that they were working towards was to create a company that would offer online movie rental service made available by streaming media as well as DVD’s that could be ordered online and delivered to the customers’ homes. (Wheelen, Case 12). Netflix had a strategic plan to undercut the competition in an effort to stress the market and force weaker competition out of the field. This was a very successful plan and over a period of years it was able to force the closings of most of its competing market to include the mega giant Blockbuster video. Using a business