...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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...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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...Opening up a business may be one of the hardest things one can do. There is a great amount of effort that goes into creating a business and even greater effort to make it successful. Before opening a business, owners are obligated to keep fresh, open ideas, have good management, and being able to financially sustain their business. Even this may not be enough to create a striving, successful business. There are many factors that go into whether a business is successful or a failure. One of the main reasons why small businesses fail is because of the owners/entrepreneurs themselves. This mainly goes for poor management skills that bring businesses to their demise. Owners who are stubborn, greedy, and self-righteous often don’t do what’s best for the company but choose what they think is the best. Also, owners who cannot operate their business financially are another reason for failure. Making mistakes such as paying too much in expenses including labor, rent and materials also factor into business failure. Businesses that don’t succeed often have poor accounting meaning there’s no organization of where the money comes and goes, and failure to have a backup plan financially. Another main reason for failure is not giving the people what they want. Entering a market that has low or no demand for their product is bad business planning. Advances in technology and a declining market also factor into the downfall of businesses. One of the main reasons why small businesses succeed...
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...Marketing 101 Case Study: Netflix Roller Coaster DO NOT FORGET TO SITE MY SOURCE----- Reed Hasting had decided he was going to start a company that he believed would be revolutionary to the world of movie rentals. That company is Netflix. The original offer Netflix had from 1998 to 2008 is that Netflix would have rentals made through its website and mailed to the customers, with no late fees, and you could choose from a flat rate subscription to choose how many movies you wanted to get in the mail. At this point the growing rate of customers and profits were increasing. The company was being recognized as a top growing company. From 2008 through 2010 more competition arose for Netflix, such as blockbuster mail service and Redbox rentals. Pay-per-view was also starting to offer more options, which was a threat. On top of the competition problems, the U.S Postal service had the possibility that they were going to shut down hundreds of local branches as well as cutting out Saturday mail service. After seeing this problem arise, Netflix decided they were going to start an unlimited streaming of movies and TV shows through devices such as TV apps, gaming consoles, or directly online. Customers were paying the same price for both mail service and unlimited streaming. This was a major hit by users making everyone happy. Netflix in 2010 had now realized that the service had had more value by offering the stemming service. So Netflix decided to start and streaming only service...
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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 Analysis Background Netflix had grown to be the largest online movie rental service provider with subscribers reaching over 53 million in nearly 50 countries with people enjoying more than two billion hours of television shows and movies per month. For only one low monthly price, Netflix customers can watch as much as they want at anytime. Starting as only a DVD by mail service, Netflix has expanded its company to digital streaming at the click of your finger. Giving you the option to watch over 12,000 titles online, which includes movies and television series. This concept of movies on your computer grew to a prodigious convenience for people who now do not have to worry about late fees. To thank for this convenience in our daily lives is Netflix’s Chief Executive Officer Reed Hastings; he developed the concept of Netflix after he had to pay forty dollars in overdue fees to Blockbuster. Starting in 2002 Netflix created an innovative program called CineMatch, which provided customers with video titles recommendations based upon their ratings and previous video rentals. The customers rated movies by assigning them one to five stars. This system helped customers and Netflix become successful knowing the recommendations were aspiring and brought more value to their subscribers. In 2003 Netflix began expanding, the company reported its first profit of $6.5 million on revenues, his is when business was booming; Netflix had over twenty million subscribers...
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...Netflix was founded in 1997 in Scotts Valley, California by Marc Randolph[12][13] and Reed Hastings, who previously had worked together at Pure Software along with Mitch Lowe. The idea of Netflix came to Hastings when he was forced to pay $40 in overdue fines after returning Apollo 13 well past its due date.[14] The Netflix website launched in April 14, 1998 with only 30 employees and 925 works available for rent and brought a more traditional, online pay-per-rental model (US $4 per rental plus US $2 in postage; late fees applied).[15] Netflix introduced the monthly subscription concept in September 1999,[16] but then dropped the single-rental model in early 2000. Since that time the company has built its reputation on the business model of flat-fee unlimited rentals without due dates, late fees, shipping and handling fees, or per title rental fees. Netflix initiated an initial public offering (IPO) on May 29, 2002, selling 5.5 million shares of common stock at the price of US $15.00 per share. On June 14, 2002, the company sold an additional 825,000 shares of common stock at the same price. After incurring substantial losses during its first few years, Netflix posted its first profit during fiscal year 2003, earning US $6.5 million profit on revenues of US $272 million. In 2005, 35,000 different film titles were available, and Netflix shipped 1 million DVDs out every day.[17] Netflix developed and maintains an extensive personalized video-recommendation system based on ratings...
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...Strategy: Blockbuster vs Netflix LDR/531 Failure Analysis/Change Strategy: Blockbuster vs Netflix Organizational Behavior Theories The organizational behavior theories which explains Netflix’s success are two; decision-making and systems approaches. Netflix made the monumental decision to become a virtual dvd rental versus a brick and mortor provided a solution in the company’s goal and vision to be ahead of technological advances in the industry. Netflix took on the systems approach in understanding and measuring the company’s input and output processes. Netflix uses the systems approach to integrate and drive processes in developing adaptive capacities, driving innovation. Blockbusters organizational behavior theory focus was on scientific leadership. The company placed a great deal of focus on how to become more effective in the company’s brick and mortor business, redefining company objectives and direction. How employing this theory failed the company was the leadership decision to not pledge the same level or more focus on the click initiative which the company could not capture the needed momentum in becoming competitive with Netflix. Blockbuster could have had a more competitive edge over Netflix sustaining its presence in the industry if only the company could define better performance practices leveraging its click business over its brick and mortor presence. Role of the organization on the Fail/Success So how did an upstart company like Netflix tale down a giant...
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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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...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, combined with the current position of Blockbuster, would not allow the company to survive in the market in the long run. We would have recommended being long on Netflix’s stocks. Netflix indeed recognized that VOD composed a significant threat, and that an immediate action had to be taken to sustain its market position. Considering that Netflix is an...
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...NETFLIX Introduction F.R.I.E.N.D.S! Breaking Bad! And the latest House of Cards episodes! Some of the finest TV shows that I’ve adored and enjoyed for many years. Having one centralized place where signing up and paying 8 bucks or so a month for sitcoms and movies from all production houses is just fabulous! That’s Netflix for me. So how popular is Netflix? Netflix accounted for 34.2% of all downstream usage during primetime hours, up from 31.6% in the second half of 2013, according to reports. That means almost a third of North America was watching some TV series or movie on Netflix between 7-11pm! Business Model and Strategy Netflix is the world’s leading Internet television network with more than 48 million streaming members in more than 40 countries. Starting from a simple DVD by mail model and shifting to online video-on-demand, Netflix has been the pioneer with more than $1.5 billion in digital revenue. Netflix was founded in 1997 in Scotts Valley, California by Marc Randolph and Reed Hastings. Hastings invested $2.5 million in startup cash for Netflix. The so-called “Apple falling” moment of Hastings’s life came when he was forced to pay an exorbitant $40 in overdue fines for returning ‘Apollo 13’ past its due date. That’s where Netflix was born! Learning from his own experiences, Hastings introduced the monthly subscription concept in September 1999, and then dropped the single-rental model in early 2000. Since that time, the company has built its reputation...
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...Summary Netflix Inc. (Netflix) is right now the biggest online supplier of DVD rentals in the US. Established by Reed Hastings in 1997, the organization offers month to month prepaid rental administrations using its online web search tool, where the organization then sends DVDs to supporters by means of the United States Postal Service (USPS). Netflix has several critical success factors such as overall cheap costs, convenience and many more. The details for each factor will be revealed at the later page. Netflix is still in the growing stage and has to face a lot of obstacles before making it to the top in online streaming. Several recommendations are stated to improve the company such as investing more in technology. 2.0 Company Background Source: www.jobsape.com Source: www.jobsape.com Netflix Inc. is an online television network with more than 44 million members in over 40 countries worldwide. The company was incorporated in 29th August 1997 and its headquarters is located in Los Gatos, California. In 1999, Netflix Inc. started its own subscription. By 2009, Netflix Inc. offered a collection of 100,000 titles on DVD and had more than 10 million subscribers. Netflix Inc. is an online entertainment retailer that provides intangible products and services to its customers. Netflix Inc. provided online movies and television series to its customers. The members can watch as much as they want, anytime, anywhere, on any screen that is connected to the Internet. Netflix Inc....
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...characteristics * Psychographic characteristics * Behavioral characteristics These characteristics all combined can identify the exact group of end-users that are targeted by companies like Netflix. Geographic characteristics Geographic characteristics, also known as geographic segmentations, include the details the operation area of the company. Netflix is viewed on an international market, which implies that the operating area is the global streaming market, at least in this case. Netflix doesn’t focus on all countries yet, their main focus is, according to the recent data, on the following countries: * * USA * Canada * Ireland * UK * Norway * Sweden * Denmark * Finland * The Netherlands Another detail of the operation area of Netflix is the internet. Netflix is mainly operating and generating cash flows from the World Wide Web. This identifies the customers to only the potential customers that have access to the World Wide Web. Demographic characteristics Demographic characteristics, also known as the Demographic segmentations, include the details of the customer’s categories that are targeted by the companies. These categories are for example: age, gender, income, education etc. Age and family life cycle The services of Netflix vary from children programs to thrillers and other 18+ movies. So the bottom line of the age characteristic is around 8. The upper line of the age characteristics could be endless, however it is...
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...Netflix Presentation * Reed Hastings, a former Peace Corp volunteer with a Master’s in Computer Science, got the idea for Netflix when he was late in returning the movie Apollo 13 to his local video store. The $40 late fee was enough to have bought the disc outright with money left over. Hastings felt ripped off, and out of this initial outrage, Netflix was born. * The model the firm eventually settled on was a DVD-by-mail service that charged a flat-rate monthly subscription rather than a per-disc rental fee. Customers don’t pay a cent in mailing expenses, and there are no late fees. Netflix offers nine different subscription plans, starting at less than $5 * In 2007, Netflix founder and CEO Reed Hastings told Fortune Magazine that if he could change one strategic decision, it would have been to delay the firm’s initial public stock offering. “If we had stayed private for another two to four years, not as many people would have understood how big a business this could be”. Once Netflix was a public company, disclosure rules forced the firm to reveal just how profitable the firm was. * Unfortunately for Hastings, others got wind that Netflix was on a money-minting growth tear, and these guys wanted in. Hollywood’s best couldn’t have scripted a more menacing group of rivals for Hastings to face. First in line with its own DVD-by-mail offering was Blockbuster, a name synonymous with video rental. Some 40 million US families were already card-carrying Blockbuster...
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...| 2012 | | Prof. Gervais Victoria Skarbinski | [Netflix] | A case analysis on the movie rental company Netflix. | The major portion of revenue that Netflix derived came from its unlimited streaming plans that included either one, two or three DVD’s out at a time from the mailing system. Netflix began as a DVD rental provider that allowed customers to use the internet to select the DVD’s they wanted to rent. Netflix’s strategy so far has included offering various plans that incorporate unlimited streaming to a viewing device from the internet and a mail order system that sends physical DVD’s to the customer for an unlimited amount of time without any additional fees (so long as they still have a subscription with the company). With consumers moving toward the digital era, which Netflix has embraced, Netflix has to focus on continuing to be an innovative leader in the movie rental industry. 1. Identify the key elements of Netflix’s strategy. What competitive advantages is Netflix trying to achieve? Netflix strategy consists of at least six major elements, but its key elements consist of: * Providing subscribers with a comprehensive selection of DVD titles. * Giving subscribers a choice of watching streaming content or receiving quickly delivered DVD’s by mail. * Offering nine different variations of their service with subscription costs ranging from $4.99 to $47.99 with a free one month trial on any service. One of the most basic features that...
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