...Netflix Iva Flores Excelsior College Business Finance What is Netflix? Is it worth it to gamble your money on this stock? One may wonder should I invest in this company or just walk away. You would have to analyze the company's financial background and ensure they are financial health to invest in this company. To find information on Netflix you would have to search online and look at the stock market websites like NASDAQ, AMEX, and NYSE to review their past financial statements. Netflix is one of the largest leading internet television network company in the world today with over 50 million members in more than 40 countries. Reed Hastings and Marc Randolph started Netflix in 1997. In 2002, Netflix makes its initial public offering of 5,000,000 shares at $15.00 per share on NASDAQ under the tickler “NFLX”. (pr.netflix.com) They started streaming service in 2007 and made it easier for people to watch and enjoy TV shows and movies anywhere, any place, and anytime as long as they have internet connection, TV, computers, and mobile devices. This type of market is very competitive especially with all the changes that are going on in the future. There are many competitors that Netflix has to compete with like Redbox, Hulu, and other companies. Netflix core strategy is to grow their streaming subscription business domestically and internationally. Also, their goal is to expand streaming content, focus on programing an overall mix of context to satisfy customers...
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...consumers’ movie rental needs has suffered a significant loss in revenue to the rise of RedBox and Netflix. The competitive advantage offered by the two companies has tapped into Blockbuster’s market and cause a lack of blockbuster for the company. Since 2009 the company has continue to reported decreased revenue and profits against its competitors. In 2010 the company filed bankruptcy and has since then implemented new services and products similar to its competitors, however, customer’s still prefer RedBox and/or Netflix. Once upon a time on a Friday night after work, you were looking to go home, relax, and watch a good movie. You come up on a big blue sign with yellow lettering, and think, “I’LL RUN TO BLOCKBUSTER!” Today, we’re looking for the nearest RedBox, or browsing Netflix for a good flick. There was time when families would take a trip to Blockbuster, order a pizza, and make it a movie night. Today, people have the luxury of not even leaving the house to find a good movie; thanks to Netflix. After a routine run to Wal-Mart, Walgreens, or Kroger’s it has become second nature to browse the RedBox, especially since the cost is only $1. But what has happened to good ol’ Blockbuster? Over the past few years Blockbuster video locations have steadily declined. Blockbuster, the once powerful source for movie and video game rental, has become nonexistent in some areas. Due to the rise of Netflix and RedBox, Blockbuster has experienced a decline in sales, continues to close...
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...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 put blockbuster and movie gallery into bankruptcy. Therefore this force is also weak as potential new entrants will be highly unlikely to be able to sustain themselves....
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...Netflix strategy has no brick and mortar stores, big stores with a large variety of movies in stock. Netflix relies on the internet for customers’ orders and mail system for the delivery. The company does not have late fees, fluctuating monthly fees, predetermined rental periods, instead has a flat fee. Netflix, allows its customers to view unlimited streaming of movies and TV shows for a monthly fee, and has also developed platforms to deliver its titles for Nintendo Wii, Xbox 360, PlayStation 3, and TiVo. Netflix also supports decks from Panasonic, Insignia, and Seagate, and a number of Android and Apple mobile devices including the iPad. Though Netflix has faced some challenges in previous years because of changes it made to its pricing strategy. Netflix has a strategy that would sustain its competitive advantage for many years to come. Netflix does not have to do or perhaps little marketing to rise to the top of the online marketing. A few well-placed ads will do the trick. Simplicity is the idea, so customers do not feel the pressure. Although, the numerous choices overall, makes Netflix an outstanding company to stay to watch the customer’s preference. During the company's rebranding strategy, there was much confusion with the customers. Some of the customers felt betrayed by Netflix and switched to other services such as, Hulu and Blockbuster. This being said, most of their customers stayed and went along with it. Though they lost some customers during this time, it...
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...Netflix Assets We classify our streaming content obtained through a license agreement as either a current or non-current asset in the consolidated balance sheets based on the estimated time of usage after certain criteria have been met, including availability of the streaming content for its first showing. We amortize licensed streaming content on a straight-line basis generally over the term of the related license agreements or the title’s window of availability Content is obtained through direct purchases, revenue sharing agreements and license agreements with studios, distributors and other suppliers. DVD content direct purchases or revenue sharing agreements. Streaming content is generally licensed for a fixed fee for the term of the license agreement but may also be obtained through a revenue sharing agreement. DVD library is its non current asset. The Company amortizes its direct purchase DVDs, less estimated salvage value, on a “sum-of-the-months” accelerated basis over their estimated useful lives. The accounting method for backlog DVD’s was changed after 1994. Our recent survey work suggests that NFLX streaming offering is compelling and should get more so as it acquires additional streaming content. In turn, this is creating a virtuous cycle whereby NFLX sub base grows, leading to greater financial resources to acquire more content to improve the user experience and continue to grow the sub footprint. Additionally we believe DVD costs may fall quicker...
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...for consumers who wanted the movie viewing experience without making a purchase. The growth of the movie rental industry via an online presence I feel will continue to grow as more and more people become accustomed to the idea of owning or viewing things through a purely digital means. With a growth in any industry comes the inevitable competitiveness that we see between Netflix and Blockbuster. I would not be surprised to see Redbox throw their hat into the ring with online offerings in the future. 5) What is Netflix’s strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fit the competitive approaches that Netflix is taking? What type of competitive advantage is Netflix trying to achieve? Netflix’s strategy was a “six-pronged” one: 1. Providing comprehensive selection of movie DVDs 2. Providing an easy way to choose movies 3. Providing a fast delivery of selections 4. Having no due dates for return 5. A convenient drop-it-in-the-mail return procedure 6. Aggressive marketing to attract subscribers and build widespread awareness of the Netflix brand and service. Of the five generic comparative strategies...
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...17 countries worldwide. It is headquartered in the Renaissance Tower in Downtown Dallas, Texas.[1] Because of competition from other video rental companies like Netflix, Blockbuster has seen significant revenue losses. The company filed for bankruptcy on September 23, 2010. Strengths * Lead market share of online rentals * Low fixed costs * Worlds largest selection of DVDs * Fastest delivery time of any online DVD rental company with over 35 DCs * Service: over 90% of DVD's are received by customers within one day of ordering * Strong website (shopability, navigation, reviews) Weaknesses * Can't control most important expense: shipping expenses * Older demographic has a hard time understanding their concept * Watch instantly feature only allows a small selection of DVD's * Distribution time * presence in only DVD segment Opportunities * Pricing segmentation (i.e., different plans) * Online distribution * Other types of rentals (Video games, educational, institutional, etc) * Internationalization * Expanding to Video Game rental Threats Rising stamp costs, Other larger retailers launching into similar space (i.e., Wal-Mart, Online digital distribution iTunes, Napster Redbox, Blockbuster allowing the rental of games in addition to movies Like most brick-and-mortar rental businesses, Netflix often has trouble providing enough copies of new, popular movies Strategy Used Blockbuster video began to sell its stock of dvds and video games before they...
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...International Expansion 6 ANALYSIS 6 Industry Analysis 6 Business Model 8 Company Analysis 9 Competitor Analysis 11 Amazon 11 Blockbuster 12 Redbox 13 ALTERNATIVES 13 Additions of Subscription Fee Package 14 Introduction of Netflix' Pay-For TV Channels 15 Domestic Elimination of DVD-mail-in Services in 16 Strategic Partnerships 17 International Expansion 19 Market Strategy 20 RECOMMENDATION 22 CONCLUSION 26 REFERENCES 26 EXECUTIVE SUMMARY Netflix is the world’s leading subscription service provider, offering its members access to an extravagant collection of TV shows and movies. Initially, the company offered its subscribers a low price, single monthly plan, consisting of both the unlimited Internet video streaming service and a DVD-mail-in service. Subscribers could “watch TV shows and movies anytime, anywhere.” In July 2011, Netflix eliminated the combined plan and separated the two services into their own monthly plans. If subscribers wanted to continue receiving both services, they were obliged to sign up for both the services separately, Consequently, the resulting price increase of the new “combined” plan significantly increased subscription cancellations and resulted in a 50% drop in Netflix’ share price over one month ( Yahoo Finance, 2013). The Internet video streaming industry becoming increasingly more competitive, particularly due to the fact that many substitutes exist and number of competitors is increasing. In addition, the...
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...Team B - Business Failure Analysis Jeffery Rhymes, Terri Zubrod, Abel Dominguez, Eric Paniagua, Su Rodriguez LDR/531 January 11, 2015 Professor David Warren Introduction The mission statement for Redbox and Blockbuster both have focused on providing customer satisfaction with media entertainment that includes movies and games. In the years prior to the inception of Redbox in 2002, Blockbuster offered customers a value price entertainment experience, combining the broad product depth of a specialty retailer with local neighborhood convenience (Poggi, 2010). Blockbuster Inc. was a global business with 8,000 stores and offered movie and game rentals for home use by consumers (Poggi, 2010). Since 1992, Outerwall LLC had looking for ways to provide value, convenience and simplicity to consumers and retailers with the kiosk brands best known, Coinstar a leader in money services and Redbox, the best value in home entertainment. Outerwall LLC has a network of more than 66,000 kiosks and will be re-imagining new retail solutions to fit everyday consumer needs for the present and the future (Outerwall.com, 2015). Blockbuster – Success and Failure Blockbuster’s vision Statement: "At Blockbuster, diversity means valuing differences. It's a corporate value that must be continually developed, embraced and incorporated into the way we do business" (Poggi, 2010). Blockbuster was a video rental store that started in Dallas, Texas the first store was opened in October, 1985 and the...
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...Netflix is the leading movie and television streaming company which was established in 2007. Netflix began as a disc rental company which offered door to door movie rentals at a monthly rate. The company also began a video streaming service which consumers pay a monthly subscription fee to access thousands of movies and television shows at a low rate of $7.99 per month. This allows the user to watch at anytime, anywhere with an internet access point and a viewing device, to stream as many movies or videos as they like. Netflix has negotiated terms with networks managing titles to either receive a profit of each title or a cut from subscription fees. How strong are the competitive forces in the movie rental marketplace? Do a fiveforces analysis to support your answer. The competitive forces in the movie rental marketplace are not very strong. Netflix’s major competitor is actually just RedBox. Most people would think Blockbuster Express kiosks would be a serious competitor, but actually Blockbuster Express (not related to Blockbuster LLC or Blockbuster stores) is operated by RedBox. According to NPD Group, a market research company, overall disc rentals was down in 2011, but it still managed be the top source of movie media in homes with 62 percent of transactions being disc transactions. At its peak, Blockbuster had operated approximately 9,000 stores, they are now operating approximately 900 stores worldwide. RedBox, a recent competitor, operates approximately 42,000 kiosks....
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...Michael Sakacsi (572739) MG 495 Business Policy 12 Oct 2012 Netflix’s New Strategy: Time To Buy? Executive Summary: “Netflix is the world’s largest online DVD movie rental service offering more than one million members access to more than 15,000 titles” (History). In addition to the selection, Netflix provides fast, free delivery. The Company was formed by Reed Hastings and Marc Randolph in 1997. These two men had previous experience in new technologies; Randolph in a computer mail order company called “MicroWarehouse” and Hastings in a company called Pure Software. Randolph also was vice president of Borland International. It was Hastings, using his $700 Million sale of Pure Software that bankrolled the investment. “The DVD format, which can store a high-quality copy of an entire feature film on a single five-inch disc, had been introduced in the spring of the year.” (History). Even with the number of titles limited (less than a thousand at the time), Hastings and Randolph thought the format had the potential to replace video tapes. This was also the same period that the much larger laser disk was coming on the scene. They took the risk that the DVD would out produce other formats and overcome to become the new standard in home video. The company opened on April 14, 1998, with 30 employees and 925 titles for rent. (History) The company initially worked under the business plan of renting and selling DVDs to customers; providing an alternative to...
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...Name:Leuteris Stamatiou Case 2:Netflix Movie rental business The movie rental business is consisted by three major players, Netflix, Blockbuster and Wal-Mart. Netflix was founded by Reed Hastings, a man who captured the idea of Netflix when he was late returning the movie Apollo 13 to his local video store and being charged with a forty dollar fee.Netflix is the number one in the movie rental business but if the company had delayed its public stock offering, the firm would be greater and stronger for its rivals. On the other hand Blockbuster a company dated back to 1985, when David Cook sought to fill a niche market for customers wanting to rent a variety of VHS titles, and Wal-Martthe largest firm in the United States ranked by sales, are the major rivals of Netflix. Blockbuster and Wal-Mart are the ones who mimic Netflix with cheaper rival efforts and “declared” a price war in the movie rental business. But in the end Wal-Mart dumped the experiment in DVD-by-mail and Blockbuster had been mortally wounded with million of dollars losses leaving Netflix alone at the top. Core business/Value-chain For a monthly subscription fee under the standard plan, subscribers can rent as many digital video discs (“DVDs”) as they want, with a number of movies out at a time, and keep them for as long as they like. There are no due dates and no late fees. DVDs are delivered directly to the subscriber’s address by first-class mail from distribution centers throughout the United States...
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...COMPANY CASE Netflix: Disintermediator or Disintermediated? PRESENTED BY: DANIEL RICARDO ORDOÑEZ 201312625 MARIA LUCIA PACHON 201311104 YALILE KATHERIN ROA 201313192 THE SABANA´S UNIVERSITY BUSSINESS ADMINISTRATION MARKETING GROUP 1.2 2015 1. BACKGRAUND Netflix is a company that was created from the need generated by getting movies to watch from the comfort of the house, although at that time the companies who led this market were Blockbuster and Redbox , but to get them you had to approach a local Blockbuster or go a supermarket or store nearby where a dispenser Redbox addition these had a specific time to be returned, if not met you could have a fine is found, Netflix identify these weaknesses in them and became its advantages as well when you wanted to watch a film could access the internet make your Netflix account and solicitabas the list of movies you wished to see them received and send you the movies , these could be the time you wished and return , so Netflix quickly gained the lead. But with technological advancement and different devices that were created Netflix realized that people prefer to search online movies so they should not leave home or wait for them to arrive , so the company decided to create direct platform on which there are not only movies but also get series , plus Netflix decided also be associated with the different technological advances for these Netflix had already built into the device as we see when we buy a PlayStation...
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...Diagnosing the Change Dr. Jay Galbraith is an established expert and consultant in organizational design. What is interesting is that Galbraith identifies Information Technology as having an integral role in what shapes an organization, as well its design. In equating how Blockbuster and Netflix each chose to respond to the emerging presence of the Internet, the relevant factors Galbraith associated with I.T. here are: Buyer Power – buyers are becoming more aware and demanding Variety/Solutions – buyers aware that they are in control want more options/better solutions Speed – buyers expect this variety of options/solutions as quickly as possible Change – the business landscape is rapidly evolving, as are the demand for variety/solutions, as well as an increase in the pressure to bring them faster These factors once realized, can be used in conjunction with Galbraith’s Star model to evaluate an organization, provide a structure for organizational form, this from which a company can align its design. According to Galbraith Management Consultants, the Star Model framework “…consists of a series of design policies that are controllable by management and can influence employee behavior.” The basic premise of the Star Model is that there are five points, each being an organizational design category. These groupings are Strategy, Structure, Processes, Rewards, and People. Following the design of the star, all five classifications must be aligned...
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...Project Proposal The proposed organizations for this project are Netflix and Blockbuster. This research project will demonstrate why the two companies changed to stay in competition. Additionally, this research project will demonstrate how technology obligates organizations to change their business model. Blockbuster opened their first store in 1985 in Dallas, Texas and expanded to operate 6,500 video rental stores (Blockbuster, n.d.). The organization was a competitor in the small video rental stores by providing a wider selection of movies and game rentals. Because of the positive, public acceptance Blockbuster expanded quickly and opened stores across the nation, London and Canada (Blockbuster, n.d.). Netflix was founded in 1997 in Scotts Valle, California. The organization website was launched in April 14, 1998 providing to the public online-per-rental model. Netflix introduced the monthly subscription concept in September, 1999. In February, 2007 Netflix introduced the video-on-demand via the Internet. At the present time Netflix provide services in Canada, Latin America, the Caribbean and Europe. Netflix is recognized to be one of the most successful dot-com ventures (Funding Universe, 2011). ORGANIZATIONAL CHANGES Blockbuster was purchased by Dish Network after filing for bankruptcy in late September 2010. The company has closed a large number of stores at it works to create an online video-streaming outlet (Merced, 2010). Blockbuster’s edge over...
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