Business

Netflix entered the rental entertainment industry at a time where Blockbuster was king and renting movies required

Netflix uses its proprietary recommendation and merchandising technology to determine which titles are presented to subscribers. In doing so, Netflix believes it provides subscribers with a quick and personalized way to find titles they are more likely to enjoy, while simultaneously effectively managing its inventory utilization. Netflix's ability to generate demand for these older titles while maintaining high levels of customer satisfaction helps the company manage and maintain gross margins, subscriber acquisition costs and churn rate and lifetime subscriber profits. The company obtains content from various studios and other content providers through streaming license agreements, DVD direct purchases and DVD revenue sharing agreements. It markets its service through various channels, including online advertising, broad-based media such as television and radio, as well as a range of strategic partnerships.

Netflix is first provider of delivered DVDs by mail that became common way and convenience for customer. Netflix offers DVDs to customers with quick delivery, which is mostly within one day (Willy Shih, Stephen Kaufman & David Spinola, 2007). In addition, customers utilize good recommendation system provided by Netflix (Scoot Merrill, 2009). Besides, customers are able to be given good customer service support (Katie Hafner, 2009).

Netflix was the first company to create an online DVD movie rental service. The service has created a new ‘movie’ market niche which has secured them a competitive ‘first-mover’ advantage in this new ‘high-tech’ venture. The popularity of the service has sparked the interest of market competitor Blockbuster who may become a growing threat to Netflix should they enter the online movie rental market (Perreault, 2004).

Blockbuster Entertainment, Inc. was once a highly successful and profitable brick and mortar home movie and video game rental store. At its peak in 2004, Blockbuster had up to 60,000 employees and more than 9,000 stores. The idea behind Netflix came from an unsatisfied, embarrassed customer of Blockbuster, Mr. Reed Hastings, now CEO of Netflix, paid a $40 late fee because he returned the movie Apollo 13 six weeks later (Zarafshar, 2013). He began to contemplate ingeniously about a notion to change the movie-leasing pattern into a more pioneering industry. In 1997 Netflix was started as a DVD rental-by-mail business without subscriptions. In 1999, taking a stride additional in the direction of evolving the industry, Hastings began the subscription-based business mode based on renting DVDs by mail with plans reliant on the quantity of titles taken at a time. Netflix put forward 120,000 titles for limitless monthly DVD rental with free shipping no late and per title fees. Since that time Netflix has become one of the most popular subscription services in the world, and is now valued at over $28 billion and steadily increasing. What factors contributed to the success and failure of these two companies?

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,

Netflix has quickly become a household name by saturating the market with a new age way to rent movies. Established in 1998, Netflix geared its business to provide consumers with quick and easy access to their favorite movies without the need to leave their homes. As the business developed and other popular sites, such as YouTube, began to gain popularity Netflix entered the market of streaming online content. During the infancy of their instant service Netflix still relied heavily on mailing DVDs to offer their customers a wider range of movies and TV shows. However, as their steaming library grew the mindset of the company began to shift. As they transitioned away from their mailing movies, key

Likewise, customization and personalization allowed Netflix users to save lists of preferred movies. As they became available, those films were delivered based on priority. Also, creating partnerships with other company's was a key strategic focus for Netflix. It was clear that paying upfront and buying movies at market cost would tie up both cash and inventory. Alliances with movie studios would give them a share of profits and equity, and a new distribution channel for film content throughout the product lifecycle (Carmia,

Netflix became the biggest competitor to Blockbuster, even though Blockbuster didn’t seem to notice. Netflix created a video rental mail-order service through their website. This was a monthly subscription service that allowed customers to receive a movie in the mail, watch it at their leisure, and return it when they were finished; all with no late fees. When the movie was received back to the Netflix warehouse, a new movie was sent from the customer’s favorites list. The customer only had to go as far as the mailbox to receive and return a movie.

Entering and transforming the video rental industry was a large undertaking for the start-up company. The first marketing objective the company undertook was the process of building a brand. Netflix’s identity was crucial to future growth and success. Without a strong brand, competitors with deep pockets could have easily duplicated the company’s business model. Secondly, leveraging technology was critical to establishing the business and infrastructure growth. The consumer base was the final objective Netflix sought to achieve. Retaining and growing subscribers were fundamental to revenue and marketing goals.

The purpose of this report is to analyze the internal environment of Netflix, Inc., within the Video Tape and Disc Rental industry. To begin

While Netflix was only one of Blockbuster’s many competitors, the company’s success forced Blockbuster to alter its business model. Netflix was able to match Blockbuster’s inventory offerings because the company was able to save by eliminating cost associated with maintaining store fronts (Satell, 2014). In response, Blockbuster began a rental-by–mail and streaming service belatedly. The company, however, failed to use the late start into the new industry environment to create a stronger and compelling introduction to the online segment (O’Neill, 2011). This failure would be the first in many of Blockbuster’s missed attempts. Blockbuster would eventually lose the majority of its market shares to Netflix and

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

In many ways, Netflix is an amazing company to analyze. By being disruptive, the company has changed drastically the disc rental business and the streaming industry. In addition, the ecommerce business model Netflix has developed was one of a kind, focusing mainly on the consumer’s needs and experience. Now, it might seem obvious that ecommerce marketers should focus on these aspects but at the time it was a first.

Over the past 18 years, Netflix has greatly evolved, changing the way movies and television shows are watched. It was founded in 1998 by Marc Randolph and Reed Hastings as a DVD mail-order service. Netflix knew that it had to grow and innovate in order to compete with other big-name movie rental services such as Blockbuster and Redbox. Because of this, both Randolph and Hastings decided to integrate streaming in 2007. Although one could only stream on a desktop or a laptop,