The main problem facing Netflix is the pending conflict with its content providers. Netflix has low bargaining power both over suppliers and buyers, and this represents an existential threat to the business. Netflix has proven to be a popular service, but despite the successes of its first ten years, there is now evidence that it has not fostered much brand loyalty, and that its customers are quite price sensitive. Combine this with the fact that its content suppliers are becoming direct competitors in the online streaming business and Netflix is in significant danger of having its growth trajectory derailed.
The third issue affecting Netflix is the age of movies that they offer to their customers. Netflix cannot deliver the newest movie titles online because they are not offered through VOD for at least a month after they come out on DVD. This is a huge disadvantage to their customers that exclusively use Netflix’s online service. This is the only advantage that Blockbuster still has over Netflix, because if someone wants to see a movie the day that it comes out on video then
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?
The year 2011 was considered the “Lost Year” for Netflix as about 1 million of their subscribers dropped their service. Why did this drastic loss of subscribed customers occur and what wrong move did Netflix make to attract such a decrease in subscribers? According to Thompson (2012, p. 127), in June of 2011 Netflix announced a new price plan that caused a 60 percent raise in the the monthly subscription fee for customers who were paying $9.99 per month for access to an unlimited amount of movies and TV shows streamed over the internet and secondly, receiving a limitless number of DVDs every month (by mail one title at a time). Netflix also tried providing its online streaming process through
This is primarily because there is no product differentiation in the market. Additionally, Netflix would then lose its flagship brand essence the supportive roles played by these two integral competencies of the company. The well-developed IT management allowed Netflix to move from DVD only to DVD and streaming, allowing the tap into the streaming market and a chance for the company to expand business.
Netflix needs to stay with the current trends of customers world-wide, keep creating Netflix original series, and keep updating their system when new devices are invented or entertainment improves. Netflix is a phenomenal way to stream the best content that is currently available to users and if they continue to provide excellent customer service at an affordable rate then I will continue to be a loyal customer for many years to
Content costs are so expensive that they derail reasonable projects. Netflix realized it had a problem as it was paying out substantial large sums to license other people’s content such as television shows and movies produced by other companies in order to show them to its customers at home. This left Netflix vulnerable to
This also allows their content to be viewed virtually anywhere. The fact that they teamed up with Oracle to work on their website was a very beneficial move as this gives them somewhat propitiatory technology. I personally enjoy their recommendations and it is obvious that with their next arrival that they have strong logistics. They have a big cost advantage too. If I can stream a whole season of How I Met Your Mother in one day, I feel as though the $8.99 that I spent was a good investment and yet I still have another 29 or 30 days to go. The two times that I had to deal with their customer service; they quality of service was outstanding and I’ve heard many other wonderful testimonials. When looking at weaknesses, I feel that their inability to provide new releases is a major drawback. In addition to this, they need to amp the selection for online streaming since streaming is expanding rapidly. The issue at hand with streaming is that it can potentially lead to server crashes if there are too many users on at once. Netflix can also be very enticing to hackers since there is so much personal information stored. I would say that the biggest opportunity for Netflix would to be to make deals with the movie production companies to allow Netflix to offer new releases. To feed off of that, they need to increase their variety; particularly in the selection of indie and international films. With as
As the world entered into the 21st Century, humanity has witnessed an ecology of innovation that ranges from artificial hearts and livers to iPods to Bluetooth technology to smartphones and many more ("21st Century Inventions That Made an Impact”). Each with its own unique attraction has become a catalyst in nature for how individuals think, act and live. Along with these state of the art developments, Netflix has become the cutting – edge service for internet streaming media. Deemed as “a worthless piece of crap” from Wall Street analysts, Netflix with tremendous leadership gained control of their industry and swiftly transformed the delivery of movie rentals ("How Netflix Beat Blockbuster: An Exemplar of Emerging Technologies”). Faced with impossible odds, we will discover how Netflix was able to survive, conquer and prosper as the emerging technology in their industry.
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.
Netflix strengths- would be consisted of brand recognition, Netflix is a very well known entertainment company with a foothold in internet movie streaming. The accessibility that Netflix allows their subscribers to stream live movies on most internet enable devices. Netflix offers original content, from orange in the new black too house of cards, that has kept their subscribers coming back for more. Netflix is one of the top providers of movie streaming in the US. The low cost for membership has had a positive effect for Netflix. Netflix just
Netflix exhibits dominant economic characteristics in the online movie rental business. They enjoy strong market size and growth rate when compared to rivalry competition. The number of rivalries are increasing, and the market remains dominated by only a few sizeable rivalries like Blockbuster Video, Wal-Mart, Walt Disney Movies and Movielink’s Downloadable Movies. Netflix is determined to offer new and innovative technology to sustain their competitive advantage.
In the age of online streaming of popular movies and TV series, Netflix is the number 1 global internet subscription provider by leaps and bounds. The company was founded in Scotts Valley, CA in 1997 by Marc Rudolph and Reed Hastings, both of which were becoming heavily involved in the “new technology” of the world. The initial idea for DVD rental-by-mail came about when Reed Hastings had accrued upwards of $40 in later fees after returning an overdue movie. It was at this point in time that Hastings vowed to never charge any customer late fees and to this day him and his company has held up that deal. During that time DVD’s were just becoming popular so Hastings and Rudolph made the decision to take up the opportunity to sign up as many early subscribers as possible for this new service they were going to offer. After many years of ups and downs, Netflix became the go to site for anyone wanting to watch a certain movie or show on their own time without having to wait for it. There are three subscription plans for the online streaming part and three subscription plans for the DVD rental-by-mail portion as well. The best part about this service is that all the plans that are offered are under $15 a month, well below the average cable bill. Having different plans available to the average consumer means that the company can pull in more revenue regardless of which subscription is signed up for. Netflix currently is carrying 48 million members worldwide in 40 different
This report explains the introduction of digital transformation or innovation in an entertainment company called Netflix. Netflix can be used to demonstrate how anybody could go from sitting in their bedrooms to becoming a global brand. Netflix is a well-known company for their capability to let people allow to stream videos, movies, TV shows and on almost any electronic device for a monthly subscription. This report involves how entertainment companies are using online monthly subscriptions for providing easy access to shows, movies, songs, videos etc. This report also creates a clear picture of challenges faced by Netflix with online subscriptions. Currently, Netflix is world’s one of the leading Internet television network includes more than 50 million subscribers in nearly 50 countries liking more than two
First of all, it offers a “prepaid subscription service” that allows customers to simply subscribe and pay a fixed fee per month. This gives the customer the ability to rent unlimited movies, something never heard of in this industry. In addition, customers are also worry-free about returning movies late since Netflix did away with all late fees. It must also be stated that in contrast to other companies that offer subscription based services, Netflix has made it relatively easy to unsubscribe from the packet or service the customer has selected. One may think this is a poorly thought idea, but it has helped customers return. These returning customers are satisfied and