Exploring Dara Analytics Is Shaping What You Watch. Netflix

The movie rental industry is a living industry; there are constant changes with advances in technology, rights management, and the slow, but steady, move away 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.

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.

Occasionally, people use to go out and rent DVD’s to watch a specific movie from rental stores. Advancement in technology has brought a sufficient change in customer’s behaviors, today DVD rental stores have almost gone. Moreover, by time we saw enormous increase in channels being provided by cable providers, but today even that has been replaced by streaming media devices, thus my time, role of cable providers might also disappear due to the introduction of devices such as Netflix, Apple TV etc. “DVD sales have also been hit. The Los Angeles-based Digital Entertainment Group estimates DVD sales in 2008 fell 8% to $21.6 billion from a year earlier, while DVD rentals were flat.” Charny, Ben. "Viewers Tap Free Web Content." Wall Street Journal, Eastern

Netflix is focusing on the groups that need to relax after a hard day of work, or just groups that seek for relaxation. This group likes to watch series or movies for their relaxation. This identifies some end-users to have a life with need for relaxation. Another lifestyle that some end users may have is the one which are fans of some movies/series genre, they love to watch some specific genre and that is where the Netflix service is based upon.

These first set of changes, cost the company one million customers and a ton of negative press in social media; including 12,000 comments of dissatisfaction. However, at this point, Netflix’s stock prices still rose. Unfortunately, on September 18, 2011, Hastings posted a new announcement to the company blog, trying to separate and over-complicate the two services. He then reversed the changes, in yet another memo, on October 11, 2011. By this point, however, it was too late; more displeased customers had left and Netflix’s stock prices had plummeted. Personally, I believe this situation caused a short-term public relations nightmare; to the customers who were affected at that time. Netflix retained over thirteen million subscribers; given time, I believe the new generation of customers will still be interested in the services they provide.

Netflix is an entertainment company that specializes in streaming media and online video-on-demand. Over the years, it has grown to include film and television production and other distribution services. Its business model has changed, and so has its overall production cost grown to keep up with the increased market share. As a result, its current position in the market has made it more exposed to competition from other firms, which is why it needs to develop new strategies to remain profitable. Netflix has grown over the past years despite competition and its unprofitability (Helft, 2007). Therefore, to understand its success, it is important provide a microeconomic analysis of Netflix, its history, its products, and the market.

A quick review of the process shows us that Netflix’s proprietary SCM software decides what movies are to be sent and where they are going to be sent to. How does this system add value to the company and is it necessary for them to operate? Well it starts adding value initially by reducing costs. When the company first started it had around 75,000 customers but required over 100 employees per distribution center in order to insure quick turnaround. Now with a customer base in the millions, distribution centers average around 45 employees (Cohen). This is due to the software allowing a lesser amount of people to handle a larger work load. According to Tom Dillon, lower costs translate to competitive

Netflix grew its customer base through advertisements, sales promotions, marketing alliances, direct marketing, and public relations. Advertising campaigns used not only traditional media platforms like television, but also innovative Internet forms of media. Affiliate networks directed customers to “www.netflix.com” by simply allowing

Growing competition as a challenge represents the various companies that are now entering the market of online media-streaming. Companies such as HBO, Amazon, Google, and Hulu Plus have all began to offer media-streaming on the same electronic devices as Netflix, Inc. Currently Netflix, Inc. remains in the lead amongst its competitors; however, there is no guarantee that this advancement is a permanent one. It is inevitable that emerging companies will come up with creative ideas to gain the competitive edge and receive more consumers. For example, Amazon.com has “amplified

It is imperative from the prospect of Netflix that they should assess external environment of the business or related industry for the reason that it would help them

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.

1. Continue building strong partnerships with other providers – the company should continue partnering up with other providers preferably the multichannel television providers such as HBO and Starz in order to increase their selection of streaming titles. This will definitely help the company not only gain but also attract more customers or consumers and therefore increase market share. This would help lower the churn rate and help expand their subscriber base. Streaming titles can also be increased and improved if the company decides to partner up with these other multichannel providers. Based on research carried out in researching about Netflix it is being understood that Netflix is in partnership with multiple other companies or television providers. Due to all of these partnerships being formed the members or frequent customers are now being able to enjoy the benefits of watching these TV episodes, shows and also movies which are made possible to be streamed to their computers and televisions via the use of Netflix ready devices. In the case of Netflix partnering up with TV provider STARZ, for example, it is obvious that Netflix formed the partnership with STARZ entertainment LLC a movie service provider to make movies from STARZ play available for instant streaming at Netflix ( Netflix Inc 2013). If Netflix continues to work well with these providers the partnerships would be a good relationship which would be beneficial to both

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 Netflix’s own description of its vision for sustainable long-term future, the company describes a few critical elements necessary for growth [Netflix.com]. Its vision encompass the evolution of internet TV, replacement of “linear TV” by the internet TV, development of interactive applications, and enhancement of streaming capability to virtual limitless access capability.

Netflix is recovering from one of the worst self-inflicted corporate marketing gaffes in years. After years of offering an excellent value to customers purchasing its unlimited single DVD and streaming services for only $9.99 a month, Netflix unexpectedly announced that it would be completely separating its DVD service from its streaming service, causing a price increasing of 60% to $15.98 for customers who wanted to keep both services. Overnight, Netflix angered many of its very loyal customers and lost over 800,000 of its 24.6 million members due to the debacle [1]. Adding fuel to the fire, Netflix decided to actually create separate brands and separate websites for the two services, keeping the Netflix name for its streaming services