...1. At the time of the case, we believe that we would have had short Blockbuster stocks owing to several reasons. First, in the existing market, the current value chain and corresponding value proposition of Blockbuster is becoming less and less relevant when compared to the existing and emerging technologies and the other offered possibilities (i.e. services like Netflix and VOD). These services can even better serve the customers’ needs for a lower price, while maintaining significantly lower operational costs. This is especially relevant for the VOD, providing both the selection and convenience of Netflix and allowing spontaneous purchases like Blockbuster. Second, Blockbuster’s equity is mostly invested in real estate and movie stocks. Thus, if Blockbuster would decide to alter it s activities to accommodate to the changing market, the resources needed to make this change happen are enormous (time, cost and physical effort). Third, based on their past behavior, it could be estimated that Blockbuster typically operates in a conservative manner, with slow reactions to market changes- this can be exemplified by their very late 2004 response to Netflix, and their blunt avoidance of reaction beforehand. Fourth, taking into account past performance of Blockbuster’s stock before 2006, we can identify a bearish trend, hinting towards the effect of the market forces on Blockbuster. Overall, we estimate that strong market competition from disruptive services enabled by emerging technologies...
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...For this case analysis I will be answering the case assignment questions for case 6: Netflix’s Business Model and Strategy in Renting Movies and TV Episodes. Before going into the first question, an introduction into the company always seems fitting for these types of assignments. According to Netflix, Inc. 10-K Annual Report Form from Edgar Online, “Netflix, Inc. is the world’s leading Internet television network with more than 33 million members in over 40 countries enjoying more than one billion hours of TV shows and movies per month, including original series,” and the report also states that Netflix, Inc. core strategy is to grow their streaming subscription business domestically and internationally. They are continuously improving the customer experience – expanding their streaming content, with a focus on programming an overall mix of content that delights their customers, including exclusive and original content, enhancing their user interface and extending their streaming service to even more Internet-connected devices while staving within the parameters of their consolidated net income (loss) and operating segment contribution profit (loss) targets. Contribution profit (loss) is defined as revenues less cost of revenues and marketing expenses (Edgar Online Report).” From this report and a few others that I researched along with reading the facts presented within our text, I look at Netflix, Inc. as a innovator in the Internet delivery of TV shows and movies, and...
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...2013 BUS 450 PROFESSOR BUCKLEY Case: Netflix’s Business Model and Strategy in Renting Movies and TV Episodes (case 6 in text) 1. How strong are the competitive forces in the movie rental marketplace? Do complete five-force analysis to support your answer. The five force model of competition contains 5 sections of competitive forces which include: suppliers, buyers, potential new entrants, firms in the industry offering substitute products and rivalry among competing sellers. * Suppliers- my analysis shows that this is the strongest force in the industry. They are the one that set market prices and control the distribution of their product. The amount of movies produced all depends on them. If suppliers decide to vertically integrate forward, businesses like Netflix and blockbuster will definitely be wiped out of business. * Buyers- these are the people that accept the market prices. They have no say although the market works to satisfying their needs. They have limited choice in terms of finding other entertainment sources except visual entertainment and therefore accept whatever restrictions the market sets for them. This is not a strong force in this industry. * Potential new entrants- considering that competition is high in this industry and many businesses have set up their market status it is hard for new businesses to enter this market. Netflix is a dominant business in the market and has almost managed to wipe...
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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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...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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...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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...Megan Welshymer BA 370 9/29/15 Extra Credit # 1 Case Study: The Netflix Rollercoaster 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, forced existing competitors, such as Blockbuster, to extend their services to include mail delivery, and inspired the very creation of Redbox. Regardless of all the competition, if Netflix can remain on the cutting edge of their craft, by continuously offering the latest releases and the most far-fetched options; they should be able to maintain their competitive advantage, because they offer a valuable, reliable service at a consistent price. 2. Reed Hastings’ strategic change and rapid reversal affected Netflix’s fourteen million customers in several ways. First, the company launched a streaming-only plan for $7.99 per month in November 2010, and increased the cost of each DVD plan by $1. Customers interested in both services, were...
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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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...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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...distribution and inner competiveness of your corporation, I suggest taking some measures to tackle the challenges. Among them, the most important thing is to build Netflix's Eco-System and segment customers to offer them different services. The basic factor contributing to Netflix’s success is highly customized experience based on the strong data collection and analysis system. Thanks to it, Netflix first developed an advanced recommendation engine, making it possible to offer every customer the movies he or she most likely watches. This not only saves customer’s selection cost, making watching movies a more relaxed and convenient experience, but also helps Netflix maintain a good relationship with those movie creators because Netflix can bring some lesser-known movies and even some movies that won’t enter theaters to customers. Besides this, the system could also predict the demand, preference and taste of customers, thus helping managing inventory more effectively with less stocks. The second important factor is the better experience customers can have when they rent movies from Netflix rather than Blockbuster. Monthly subscription without due dates and late fees means more freedom and flexibility, online browse and selection means quantity and variety across genres, and receiving and returning movies via mail means comfort and time-saving. All this satisfy people’s desire for convenience and also love for movies, so it becomes appealing to customers and attract increasingly...
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...Case 1 Netflix February 14, 2013 Netflix doesn't have a mission statement available online, but at the following values were published on a related website from a conference Netflix held. * Becoming the best global entertainment distribution service * Licensing entertainment content around the world * Creating markets that are accessible to film makers * Helping content creators around the world to find a global audience We promise our customers stellar service, our suppliers a valuable partner, our investors the prospects of sustained profitable growth, and our employees the allure of huge impact. Netflix also published company values, the following values are listed below: * Judgment * Productivity * Creativity * Intelligence * Honesty * Communication * Selflessness * Reliability Passion This is also available from their website, which could be viewed as a vision statement for our purposes. "Our appeal and success are built on providing the most expansive selection of DVDs; an easy way to choose movies; and fast, free delivery." Step 2: Developing a mission and vision statement for Netflix. They need to focus on expanding properly without stretching their weaknesses too thin they also need to perform well in getting more tittles. Mission: Netflix provides the highest quality and advanced streaming content to an ever expanding, global market. All while Netflix is...
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...Case Study: Place Your Bets: Netflix Versus the Field in DVD Rentals Answer to the Application Question no.1 : Netflix Core Competency: Providing monthly subscription facilities. Providing a choice to make an order list. Not charging any late fees and customers can keep the products as long as they need. Providing the products to the customers’s hand as early as possible to make sure of cost. effectiveness and time efficiency. Providing “Watch instantly” feature to its eligible customers. Netflix strategic Asset: Is highly experienced business since it launched 1997. Has a collection of 100 000 DVDs. Has a features of personalized video recommendation system based on ratings and reviews. Introduced Set-Top box with the help of Roku Inc. Plan to sell LG brand DVD players for downloading and watching movies on TV through Netflix. Has a brand name and a popular business model that was followed by Walmart and Blockbuster. Some Strategies of Netflix’s business model that hard to imitate: Netflix follows “Cost Leadership Strategy” as it has not charged any addition cost of watching movies instantly for their subscribes. Netflix is also using “Differentiation Strategy” as it has introduced Set Top box and DVD players. Netflix has built a partnership network to Roku Inc. and LG. Those things are really hard to imitate by the competitors of Netflix. Answer to the Application Question no: 2 Some advisable things that...
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...These deals are beneficial to Netflix because it not only helped Netflix boost its differentiation from Blockbuster by offering streamed movies but it also made them become a unique provider since they also offer physical videos. By making these contracts, Netflix has more movie options, on more devices. Another reason it is so beneficial to Netflix is because now more “Americans get high-speed Internet connections”. Aside from the fact that they can stream movies, they have made deals with so many other companies which can offer their movies to more people on different devices. It is much more practical to watch a movie on Netflix for most people because one person may have a Wii consoles and others may have Apple TV. No matter what you have, most consoles now will offer Netflix. Although their exchange gives bricks and mortar stores more time to have movies sooner, Netflix is more convenient and some viewers are willing to wait simply because they prefer the convenient option. Streamed movies can also be controlled more easily than DVDs, which use menus and have advertisements in the beginning. Customers can more easily forward through parts they don’t want to see and pause and watch on other TVs or computers if they choose to change the room they’re in. Even though they are not like the bricks and mortar stores, they focus on customer service similar to how a store would, offering suggested titles and allowing for an easy movie look up in the search bar, rather than a slow...
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...9-607-138 REV: APRIL 27, 2009 WILLY SHIH STEPHEN KAUFMAN DAVID SPINOLA Netflix Late one afternoon in January 2007, Reed Hastings had just concluded a meeting with his senior management team in the King Kong board room at Netflix’s corporate headquarters in Los Gatos, California. Hastings, the founder and CEO of the company, which pioneered online DVD rentals, was preparing to unveil Netflix’s highly anticipated entrance into the online video market. Many industry observers believed that the ability of customers to order movies through their computers for instant viewing, commonly referred to as video-on-demand (VOD), would quickly impact the large user base for Netflix’s core business. Hastings looked across the third floor of the office building and the conference rooms named for some of his staff’s favorite films. A love of movies clearly ran deep among Netflix employees, and he was confident that one way or another, his team would maintain the company’s position as a leader in the home video market. But, as he reflected upon the years of investment and discussions surrounding the new feature that Netflix would be offering its customers, he could not help but think of the merits of the paths not chosen. As the management team filed out of the board room around him, Hastings returned his thoughts to the present. While he believed that the DVD rental market would remain healthy for years into the future, he knew that this announcement would impact not...
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...INTRODUCTION Netflix is an Internet based organisation that provides online streaming and DVD rentals to customers all over the world. Founded in 1997 by Marc Rondolph and reed Hustings Netflix reached 27 million subscribers at the end of January 2013.In the beginning when DVDs first came out to the market the CEO and one of the founder OF Netflix Reed Hustlings take this as an opportunity, The plastic disc small size and light weight make it cheap to send it through mail. Netflix takes advantage of the US postal services and send rental DVDs to customers through mail and accept returns the same way. With time Netflix has evolved into a company with reputation of low charge, unlimited movies without a due date, no late fees shipping or handling fees. Netflix then makes it more easier for costumers by introducing the online streaming options to watch movies at their on time when ever they are free. The online streaming allows subscribers to browse by many different categories, such as moods, qualities, story line, release dates, music, and cultures. Netflix search features are highly comprehensive making finding a film very relaxed and fun. If someone wants to watch a specific show but does not seems to remember the name of show it can be easily lookup by the starring actor. After selecting a title the online database of Netflix shows a DVD case and details about all the actors and actresses staring in the film/show. Environmental scan of Netflix. Internal Analysis Netflix vision...
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