...Netflix Case Study * Company Overview Netflix is the world's largest online movie rental service, providing more than seven million subscribers access to more than 90,000 DVD titles plus a growing library of more than 5,000 choices that can be watched instantly on their PCs. The company offers nine subscription plans, starting at only $4.99 per month. There are no due dates and no late fees – ever. All Netflix plans include both DVDs delivered to subscribers' homes and, for no additional fee, movies and TV series that can be started in as little as 30 seconds on subscribers' PCs. DVDs are delivered free to members by first class mail, with a postage-paid return envelope, from over 100 U.S. shipping points. Nearly 95 percent of Netflix subscribers live in areas that can be reached with generally one business day delivery. Netflix offers personalized movie recommendations and has two billion movie ratings. Although, very successful completion grows which are threats to the company. Netflix needs to create a strategy to be able to Partner with cable companies and networks such as HBO, Cinemax that do not license any of their series. They need to create a team hence forth, spend and analyze critically their hiring decisions. This team will be monitoring, evaluating and disseminating the information from the external and internal environments to key people within the organization. They need to create a pool of highly qualified experienced personnel that would efficiently and effectively...
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...Abstract The following is a case study of Netflix, Inc. an American-based company that provides the streaming of online media to consumers in North America, South America, and parts of Europe. This case study will provide a brief overview of the company’s history along with four present-day challenges that the company will face as it tries to stay ahead of the competition. In its discussion of the present-day challenges that Netflix, Inc. faces the discussion will also relate the proposed challenges to the managerial challenges of globalization, diversity, and ethics. After each of the four anticipated challenges have been addressed then this paper will provide an analysis of the steps that Netflix, Inc. has already taken to keep the company on the frontline of online media streaming. This paper will also provide suggestions as to what can be done in order for Netflix, Inc. to become the number one competitor and innovator in the market. Keywords: Netflix, challenges, analysis Past to Present In 1997 Netflix, Inc. was founded in Scotts Valley, California by Reed Hastings and Marc Randolph initially offering weekly DVD rentals online. Within two years Netflix, Inc. transitioned from offering weekly rentals to offering a subscription service that allowed consumers to rent movies as frequently as they pleased for a monthly fee. In a matter of ten years Netflix, Inc. began to offer the online streaming of media for a subscription fee and ended the year with 7...
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...Netflix Incorporated, Case Study Marketing 101-H1 Assignment 2: Case Study Analysis Group 4: Jagvir Bagri, Michael Catalfamo, Tina Hoang, Jason Rudzki Submitted to Dr. Youssef Ahmad Youssef Humber College Business School September 27, 2010 Introduction In the summer of 2011, the co-founder and chief executive officer of Netflix Inc. Reed Hastings, made the decision to separate the companies online streaming service from the DVD rental service. The DVD rental services mails out DVD’s to customers one video at a time and the streaming service allows customers to watch movies and television shows via the internet. Instead of charging each customer a flat rate for both services, as it had in the past, Hastings wanted to charge consumers for each service as its own separate entity. This meant each customer would now have two accounts (instead of one), pay considerably more in membership fees and still receive that same amount of content. Shortly afterwards, on July 12, 2011. Mr. Hastings, publicly announced the changes and informed his customers that they would come into effect in that coming September. In 2010, the business reported revenues of more than two billion dollars and had approximately twenty-million subscribers. After Hastings announced the split, his stocks fell by more than fifty percent from a one time high of more than three hundred dollars per market share. Stocks in Netflix continued declining quickly and before the end of the year, they...
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...Netflix Netflix Inc. had its start in 1997 when it was incorporated by its current CEO and founder, Reed Hastings. It was not until 1999 that Netflix finally began to rent movies to its customers. At its origin, Netflix was a DVD rental service that only rented through the mail. With this type of service, customers would pay a membership fee that determines the number of DVD movies that they were allowed to rent at a given time. Once the customers would choose their desired movies, the DVD’s were mailed to them and then returned whenever the customer finished watching them. In 2007, Netflix introduced the concept of streaming on-line videos to its customers which allowed for instant access to their inventory that was formatted for such viewing. With the on-line streaming, they were still offering their original DVD service through the mail. Netflix introduced this new service in the attempt lower their overall costs that was brought on by paying for the shipping and handling of the mailed DVD’s. In 2010, Netflix introduced only their on-line streaming service internationally to over 43 countries. In 2011, it was announced that Netflix would stop the combined services of streaming and DVD rental and instead offer these services in separate subscriptions. Their customer base was displeased and the company’s stock prices had experienced a major drop in a short period of time. During the same year, Netflix sold a portion of their stocks to mutual finds causing their stock...
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...as influential as Netflix, building a service from the ground up that supports millions of different viewing opportunities for its subscribers in a variety of markets. Netflix however is not immune to rapidly changing marketplace in which it shares strong competitive competition. Multiple companies including; Apple, Amazon, Hulu, RedBox and others bring new options to the table for the consumer and place Netflix in the carious position to continuously rethink and develop its marketing strategies if it wishes to stay on top of the competition. This paper looks at several areas surrounding Netflix current market strategy and how it will likely fair against its competition moving forward. Along with looking at the current market strategy of the company focus will also be paid to Netflix’s past failures and success and the potential for continued success in the future. Keywords: Competition, Competitive Advantage, Marketing Strategy Netflix Case Study In 1998, Netflix CEO Reed Hasting, along with software executive Marc Randolph officially opened Netflix for business. Hasting and Randolph realized the potential opportunity and perceived growth that the DVD market would have on the US entertainment sector. Further they were able to capitalize on DVD’s smaller size, in comparison to VHS, and developed an approach to deliver the new entertainment media to consumers via rent-by-mail service. While the DVD was becoming rooted in the US market, Netflix was able to build strategic...
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...Summary Netflix is the world’s leading online streaming media company. By entering licensing agreements with major film studios, Netflix is able to distribute movies and TV shows online for a low monthly price. The 57 million streaming members in 50 countries can watch as much as they want from the content library, as long as they have an internet connected screen. Since 2007 they have pioneered delivery of TV shows and movies on a newly developed ecosystem that enables consumers to enjoy TV shows and movies directly on their TVs, computers and mobile devices. The company has three reportable segments: domestic streaming, international streaming and domestic DVD. The domestic and international streaming segments derive revenues from monthly membership fees for services consisting solely of streaming content. In the United States, members can receive DVDs delivered quickly to their homes, which is an additional 5.7 million users and 32% of net income even though it is on rapid decline. The domestic streaming content membership is 39 million members versus the international which is 18 million. In today’s market, there are several risk factors that Netflix faces and needs to handle to be competitive in the future. Some of these risks are the high licensing costs for the content they host, high reliability on other sources for streaming to customers devices and the need to constantly improve and innovate their corporate strategies (Netflix, 2013). Netflix expansion...
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...Background: • Netflix is an online video streaming services provider and DVD rental company in United States. • It is the largest player in the area of video streaming boasting of 25 million subscribers. • Netflix made use of Amazon Web Services to gain knowledge about the full details of its subscribers’ viewing patterns. • By shifting its computing architecture to cloud, it boosted its data mining prowess. • Content owners saw the growing business of Netflix as major competition and subsequently started charging more amount of money from Netflix, sometimes even bringing the licence arrangements with Netflix to an end. This made the life tougher for Netflix. • Netflix, as a strategy to evolve its business, decided to have the original content...
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...In order to assess the attractiveness of the video rental business, the industry necessitates an evaluation through the analytical lens of the five contending forces of competition. First, there is a significantly low threat of new entrants mainly due to high barriers of entry and economies of scale. For example, there are substantial capital requirements in construction of fixed facilities in strategic locations in order to distribute DVDs; there are also unrecoverable expenditures in up-front R&D and advertising costs, both of which are emphasized in order to differentiate service and build brand equity. There are also government policies to reinforce the barrier. For example, in addition to its red envelops, Netflix has patents to protect essential characteristics of its business model such as its “Max Out” and “Max Turns” approaches. This creates cost disadvantages through a greater learning curve for new entrants, especially when competing against algorithmic programs such as Netflix’s CineMatch, which becomes more effective at recommending movies as more subscribers provide feedback. Another governmental restriction is seen specifically with Amazon.com, whereby distribution channels are choked out in the US unless Amazon sacrifices its competitive advantage of avoiding sales tax. The second force of competition, the bargaining power of the supplier, is assessed as moderate to high. The movie studios and independent movie distributors provide the rights to distribute...
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...supplies short, there are not many alternatives to obtain DVD’s or right to a movie. The seller has the power to control distribution and prices. Buyers Buyers have limited powers and options. An avid movie renter is limited to the selection available in store or library on line. The movie rental companies are limited to the supply they can purchase and stock their stores with. They are unable to control prices, but larger companies do have the upper hand since they can order larger quantities to get a better deal. Rivalry among Competing Sellers There are very few competitors in the movie rental industry of which consist of Netflix, Blockbuster, and small businesses. These few control overall market share of the industry. The main competition is between Netflix and Blockbuster. Blockbuster is currently the leader in movie rentals until Netflix introduced their DVD’s by mail program and subscription based business model. Potential New Entrants There are little to no potential entrants into this industry. A recent entry into the movie rental industry is Red Box; they are a vending machine style movie rental. This market requires entrants to have large capitals to acquire movie rights along with fresh new...
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...Kelsey Davis GBA 490 Professor Shelton February 27, 2014 Netflix Case Questions 2. What forces are driving change in the movie rental industry? Are the combined impacts of these driving forces likely to be favorable or unfavorable in term of their effects on competitive intensity and future industry profitability? The movie rental industry has many forces affecting it. A force that is driving change is always the possibility of potential new entrants into this industry. The movie rental market is growing at a fast pace with few obstacles blocking the competitors from entering the movie rental industry. This could easily dilute the market and pose a potential problem in the future. Another force that is driving the industry is the rivalry among competitors. The number of competitors in the industry is quickly growing. With products offered having little to no differences and the consumer’s cost of switching services very low this makes it a hard industry to compete for customers. Rivals will have to be creative and come up with diverse strategies for providing their services in order to survive in this industry. 3. What does your strategic group map of this industry look like? How attractively is Netflix positioned on the map? Why? When observing the strategic group map the movie rental industry, it is obvious that Netflix is in a great place on the strategic group map. Despite the obstacles Netflix has had to overcome it still holds a large part of the market share...
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...Executive summary The report starts by identifying creativity and innovation as the key to Netflix past success as Harold has consistently shown in his decisions throughout the history of the company taking bold action to chase un-ventured routes to satisfying customer needs. The essence of the report however, is to highlight the issues surrounding the current technological advancements in the DVD rental market now that VOD has become a feasible and realistic platform that can be supported. Netflix is faced with a multitude of options and my argument is that it must base its decision upon the long term strategy of the business. There is still a growing demand for DVD’s in their physical format proven by their increasing rate at which Netflix acquires new prescriptions to their existing DVD postal service and this is predicted to continue to grow for many years yet. Netflix currently has 45 million copies in distribution whilst it holding a huge investment in its offline, sorting and distribution network. Therefore the company does not want to risk cannibalizing its core business at the expense of innovation. Although I think the switch over to streaming content via VOD is where Netflix should be heading, I feel it’s vitally important to place an emphasis upon gradual integration. It is proposed that Netflix enters the VOD market by opening a new subsidiary company reducing the risk to its existing operations whilst testing the market and venturing into foreign...
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...Since founded in 1999, Netflix has grown to become the world’s largest online movie rental service. In the beginning of 2007, Netflix surpassed 6.3 million subscribers. With a catalog that includes more than 100,000 titles, Netflix is leading the movie rental market. Netflix’s subscription-based business model was a disruptive innovation in the movie rental business. By using the internet, Netflix focused on providing convenient and affordable prices for an entertainment industry that was already highly popular. Based on a product that consumers already loved, Netflix’s business model was profitable because it improved the consumer’s rental experience. The company aimed to become the best cost provider. As part of its competitive advantages, Netflix has an intuitive website (easy to use), personalized movie recommendations, and excellent customer service. Netflix has been rated No. 1 in online retail customer satisfaction by Neilsen Online for the past 3 years and for nine consecutive periods by Forsee/FGI Research (Netflix, 2009). Netflix’s strategy for success has included providing a comprehensive selection of movies; an easy way to choose movies, fast delivery, a no late fees policy and a convenient drop it in the mail return system. These strategies ensured a competitive advantage to Netflix and threatened to make the traditional video store obsolete. A combination of its business model and strategic approach carry out the mission of the company. Diagnosis of...
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...Analysis of Strategy Analysis of Strategy Netflix Lauren Lane Strategy 10.15.12 Netflix Lauren Lane Strategy 10.15.12 Netflix was born from an idea in 1997 from Reed Hastings, in conjunction with his partners Marc Randolph and Mitch Lowe. As a company Netflix has derived its profits from a consumer’s ability to stream DVDs online as well as have them delivered to their house, completely remodeling the idea and process of video and television rentals. Netflix created a product that filled the void of instant media access to consumers, and created a product that makes video and television viewing a service that everyone could access and afford. For a monthly subscription fee, subscribers can rent as many DVDs as they would like and keep them for as long as they like while also being able to stream movies and TV shows online, giving them access to hundreds of thousands of options of what they want to watch. There are no due dates or late fees for the DVDs which was a change from the traditional way of movie rentals. 1. Identify the key elements of Netflix’s strategy. What competitive advantages is Netflix trying to achieve? Netflix created the perfect storm of a company that encompasses and produces a product accessible from multiple different mediums for consumers. A consumer of Netflix has the ability to keep to a more traditional way and continue to watch DVDs of their favorite movies, keeping to a tradition held in the world for many years. However...
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...Internet-connected Blu-ray players, video game consoles, TVs, computers, tablets, and/or smartphones were rapidly shifting from renting physical DVDs to watching movies and TV episodes streamed over the Internet. Increasing numbers of devices had recently appeared in electronics stores (or become available from cable, satellite, and fiber-optic TV providers) that enabled TVs to be connected to the Internet and receive streamed content from online providers with no hassle. These devices made it simple for households to order streamed movies with just a few clicks instead of traveling to a video rental store or waiting for a disk to be delivered through the mail. In 2012, more than 700 different devices were capable of streaming content from Netflix. Consumers could obtain or view movie DVDs and TV episodes through a wide variety of...
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...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. Assignment Questions 1. How strong are the competitive forces in the movie rental marketplace? Do a five-forces analysis to support your answer. Threat of New Competition: Netflix has almost zero threat of new competition. Any new competition would have to overcome large capital expenses to get started; these expenses include obtaining TV show and movie rights from the studios. Even if the starting expenses are obtained, the new company would have to be innovative and grab a hold of the market quickly to be successful. Threat of Substitute Products or Services: Netflix has a lot to worry about with this being the strongest of the five forces. Where Netflix offers DVD rental and Streaming service, it is in a market with other viewing formats such as Video on Demand and Pay-Per-View. Many moviegoers have membership to one or more of these services and switch back and forth between them to suit their viewing needs. Bargaining Power of Customers (Buyer Power): Users of Netfix have a ton of buyer power, they can easily compare Netflix to other DVD and streaming services and determine what seems reasonable for them. This causes Netflix to keep an eye on competitor’s prices and continuously adapt their business model. Bargaining Power of Suppliers (Supplier Power): Netflix acquires its content directly from studios...
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