Reed Hastings, co-founder of Netflix headquartered in Los Gatos, CA, began the company’s operations in 1997 after receiving an enormous late charge from a movie rental he returned long overdue. However, Hastings had the desire to be different than traditional movie outlets; whereas, customers had to drive to the location, pay a certain amount for each movie they rented, and were given a deadline in which to return the movie. Instead of using a method established by other video markets “to attract customers to a retail location, Netflix offered home delivery of DVDs through the mail” which eventually led to a booming business towards streaming forms of entertainment (Shih, Kaufman, & Spinola, 2009, p. 3). Today, Netflix exists along with several competitors; however, offers the most streaming content available for viewing, and continues to grow its subscriber base both domestically and globally. Although, direct and indirect competitors, acquisition costs, and several barriers present a financial threat for Netflix, the company has managed to grow with the acclamation of partnerships, expand to international territories, and vastly increase its price in shares of stock.
The History of Netflix
Although Hastings vowed to be divergent from other video retailers, his goal was to use an identical pricing strategy; however, one that would “appeal to customers [. . .] who used online shopping as an alternative to traveling to retail outlets” due to ease of access and more preferences (Shih, Kaufman, & Spinola, 2009, p. 3). Furthermore, Netflix launched its business at a time DVDs had barely hit the marketplace as the firm anticipated the new technology to be a promising venture. Nonetheless, within a year DVD players became so vast...
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The Huffington Post.com, Inc. (2014, January 23). Netflix stock soars to new high. Received from http://www.huffingtonpost.com/2014/01/23/netflix-stock-new-high_n_4653176.html
Kriete, L. (2013). 2013 Netflix strategic plan. Retrieved from https://lpelin.expressions.syr.edu/trf483/files/2013/05/final_strategic_report.pdf
Netflix, Inc. (2013). Form 10-K: 2012 Annual Report. Retrieved from http://files.shareholder.com/downloads/NFLX/3053269812x0x658002/2604be28-a3d3-49e6-a504-df6cb4856a02/2012_10K.pdf
Roxborough, S. (2013, May 2). The Netflix plan to conquer the world. Retrieved from http://www.hollywoodreporter.com/news/netflix-plan-conquer-world-449083
Shih, W., Kaufman, S., & Spinola, D. (2009, April 27). Netflix. Harvard Business School Case 607-138, p. 1-15. Retrieved from http://embadu.com/sites/default/files/Netflix.pdf
Expand outside of the U.S., Puerto Rico and United Kingdom (where technology is moving at a slower pace and people are not as familiar with Netflix or VOD).
Harvard Business School case 274-116. Cooper Industries, Inc. Retrieved on August 31, 2008, from University of Phoenix, Resource, FIN/545 web site: https://mycampus.phoenix.edu/secure/resource/resource
A critical SWOT analysis of Netflix’s social media techniques clearly shows they are ahead of the game and not backing down from rising competitors like YouTube which is gaining viewers by increasing the amount of online content.
With over 35 distribution centers across the United States, Netflix has the fastest delivery time of any online DVD rental company. Through the use of the United States Postal Service, over 90% of DVDs are received by customers within one day of ordering. ? Netflix?s easy to use website allows customers to browse the video library by category such as action, romance, drama (sixteen total categories) or by using a comprehensive internal search of the library. ? Netflix uses the technology of Cinematch to give customers even better service. Cinematch studies past selections made by members, and begins to recommend titles that would likely be enjoyed by the customer based on previous selections. ?
The average Blockbuster store carries roughly 1,500 movie titles. Netflix carries more than 12,000 titles. It has movies that you can't find anywhere else. And Netflix uses collaborative filtering technology to send you emails that alert you to movies that you might otherwise never consider. Netflix saw the video- and game-rental market moving to DVD and built its business around that trend. Netflix doesn't rent videocassettes, only DVDs (in part because they're lighter and cheaper to mail). Netflix was able to identify and implement a strategy fo...
As advance technology of fiber-optic developed and is on the rise, everyday there is another story about entertaining movies on demand and streaming online is with ease. Those developments which let movie’s viewers sit in the comfort of their home or anywhere with access to the internet can stream instance movies with a push of a bottom. They no longer need to make a trip to the movie’s stores for movies rental and return, so that is why movie shops fail and filed for bankruptcy bring a symbolic close to the “let’s go rent a movie” era. Blockbuster LLC, formerly Blockbuster Entertainment Inc., both owned and franchised American-based giant provider of home movie and video game rental services through video rental stores, later adding movies by mail, streaming online and video on demand. Due to the peak of fiber-optic and competition from companies such as Netflix, Redbox, and GameFly, Blockbuster became the victim of digital media and filed for bankruptcy on September 23, 2010 due to significant lost in revenue.[3]
The idea inspired Reed Hastings and Marc Randolph, and then they founded Netflix in Scotts Valley, California in 1997 (Netflix, 2014). The company comes into play by developing a subscription-based streaming platform for movies and television shows. Unlike the traditional movie rental businesses such as Blockbuster and Redbox, Netflix’s innovation offers service via Internet, and it does not have any physical stores but instead delivers DVDs through postal mail in the U.S. Since then, Netflix has become the world’s leading internet television network with constant growth of customers to over 48 millions members in more than 40 countries in the North America, Europe, and the Latin America (Netflix, 2014). In this analysis, the main focus is examining the current market environment for Netflix. It identifies the type of market structure that Netflix is currently competing. The analysis also expands on the competitions, product differentiation, pricing strategy, and measuring the level of easy entry-and-exit.
The video rental industry began with brick and mortar store that rented VSH tape. Enhanced internet commerce and the advent of the DVD provided a opportunity for a new avenue for securing movie rentals. In 1998 Netflix headquartered in Los Gatos California began operations as a regional online movie rental company. While the firm demonstrated that a market for online rentals existed, it was not financially successfully. Netflix lost over $11 million in 1998 and as a result significantly changed the business model in 2000. The new strategy included focusing on becoming a nationally based subscription model and focusing on enhancing the subscribers experience on their website. The change in strategic focus has allowed Netflix to grow into the largest online entertainment subscriptions service in the United States with over 6.3 million subscribers (Netflix).
Netflix was established by Marc Randolph and Reed Hastings in 1997 in California. Initially, the company offered a DVD-by-mail service for a monthly, flat rate subscription fee. Videos were sen...
Fifteen years ago, South Korean cinema was in precipitous decline. It was facing deadly competition from Hollywood as import barriers were dismantled, and had almost no export market. Today, South Korean cinema is widely considered the most successful and significant non-Hollywood cinema anywhere in the world today. It is successful both in the domestic market, and internationally. This essay sets out to understand this phenomenon. First, it attempts to trace South Korean cinema’s comeback story. I feel a need to do this because I find that so many of my South Korean friends and colleagues are reluctant to admit this, or focus solely on the problems the industry is facing in the future. There may be worries about the future and there may be “ifs” and “buts” about the present state of the South Korean film industry. But we should start out by acknowledging its success.
As the firm moves forward, top managers must pay attention to staying unique to sustain a competitive advantage. Netflix does not own their content, nor do they have any tangible assets. Netflix is a part of a broad range of network users. As technology continues to grow exponentially, Netflix will have to be readily adaptive to change and innovation. Technology never stops growing and evolving, therefore, Netflix’s business platform should never stop growing and evolving. At the same time, they must be careful to remain user friendly and customer centric by keeping the technology at a level where users will not have to obtain a certain set of technological skill sets.
The twenty year journey of Blockbuster has not been without bumps, valleys, road blocks, and detours. Blockbuster has come under legal fire from Netflix, a major online competitor, the Free Trade Commission for attempting a host...
Netflix, The American Online On-Demand Video Streaming Giant crossed the border into Canada on September 22nd of 2010 looking to capitalize on the largely untapped online TV and Movie streaming market. While Netflix Canada, for the moment, will not be offering its flat rate online DVD-video and Blu-ray Disc rental service as in the United States, it is bringing a top quality video streaming service to Canadians...but will it be enough to change the way we rent, buy and watch our favorite TV episodes and Movies? When I first heard that Netflix was coming to Canada, I was pretty excited. I watch a lot of movies, mostly on my laptop after everyone else has gone to bed, and the concept of being able to watch any number of movies online at any
...ds', Harvard Business Review, 90, 3, pp. 25-27, Business Source Complete, EBSCOhost, viewed 31 October 2013.
Hastings focused the company's strategy on developing software to stream video online. With its online model, Netflix also started building its DVD library to include titles that Blockbuster could not get hold of or display in its stores. Within a number of years, the catalogue in Netflix far surpassed that of Blockbuster.