Karissa Rupnarain
Professor Dumas
Senior Seminar in Informatics
Final Paper Draft
4/27/15
THESIS
Netflix is revolutionary company operating in an incredibly dynamic industry populated by both longstanding and new competitors. In one hand, Netflix has partnered with movie and television studios to provide access to feature-length movies and episodic TV shows in the same manner that existed when the medium was designed- DVD rental. In the other hand, Netflix is operating with growing role of computer-enabled devices and data transmission systems in our lives, in mind. They allow users to view media content in virtually any location with a power source and Wi-Fi connection. As a provider, Netflix has evolved with developing technology and have adapted to changes in content consumption. Hence, Netflix has had a great influence on the home entertainment environment and on the profitability of their competition.
THE SPARK In Scotts Valley, California, in the August of 1997 Reed Hastings and Marc Randolph, both veteran “new technology” entrepreneurs, founded Netflix to rent and sell DVDs over the Internet. Hastings, a former math teacher had achieved great success after establishing Pure Software and later selling said company for $700 million dollars. After Hastings was forced to pay $40 in fines after returning an overdue videotape of the film Apollo 13 he came up with the idea for for rental-by-mail. Co-founder Marc Randolph assisted in establishing a computer mail order
Q 1. Some of Netflix’s capabilities and core competencies are mentioned in the case. Go
The way we rent, watch, and stream television or movies has changed dramatically over the past 10 years thanks to two men. Netflix co-founders Marc Randolph and Wilmot Reed Hastings redefined the movie rental industry when they created Netflix. The idea for the company was born when Hastings rented a VHS from a video store, and then misplaced it, which resulted in him returning the movie six weeks late, and being charged a $40 dollar late fee. When on the way to the gym one day he had a great idea, “'Whoa! Video stores could operate like a gym, with a flat membership fee.' And it was like 'I wonder why no one's done that before!'" (CBSNEWS). This idea of having a flat rate fee for unlimited movies was at the core of Netflix’s creation.
Reed Hastings and Marc Randolph co-founded Netflix in Los Gatos, California in 1997. Between 1998-2000, Netflix launched its online rentals, sales, subscription service, and a system of recommendations that can predict a consumer’s choice (Netflix). In May 2002, Netflix announced its first public offering led by Merrill Lynch. They offered over 5 million shares of common stock for $15 per share.
First formed in 1991, Netflix has become today’s predominant video rental service. They offer a hybrid service allowing DVD delivery by mail as well as streaming movies and TV shows via their company website or access on 200 other devices. Their unique business process has netted them over 16 million subscribers and revenue around $500 million annually. The reason for their growing success can be attributed to a good business model and just as important, properly implemented systems. An extremely efficient supply chain management system (SCM) and customer relationship management system (CRM) have helped Netflix become the world’s largest video subscription service.
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
Netflix has some interesting growth strategies over the next few years. Their plan is to continue to innovate and enhance the consumer experience, as evidenced by their new streaming video program. They also intend to focus on subscriber growth, in order to maintain market leadership, and realize economies of scale. They believe they will continue to grow by leading the expansion of online video rental. The company plans on doing this by offering subscribers both mail delivery and a continuously improving online video option. Netflix believes that their appeal and success are built on providing
Reed Hastings co-founded Netflix in 1997. During this time, Netflix offered DVD rentals by mail. The Netflix organization went public in 2002, a year later their subscription reached one million (Blodget, 2011). Prior to making new cultural changes, Netflix was a created to provide movie videos at a cheaper piece to customers than competitors, such as Blockbuster. The objective of the Netflix organization was to make easier for customers to rent movies and to eliminate the annoyances involved in picking up and returning the movie rentals to the store. Netflix tried to make the company more like Blockbuster and other video stores, which was challenging. Netflix faced issues of getting movies to customers from a warehouse in a reasonable
Netflix, Inc. is a television network which provides streaming of movies, television shows, and original series. It was founded by Reed Hastings on August 1997, and its headquarters are located in Los Gatos, California. Netflix functions in Domestic Streaming, International Streaming, and Domestic DVD. Its content, which is received from several studios and content providers, can be streamed through Internet-connected screens, such as television or mobile phones. In April 2017, it had about 100 million members in 190 different countries.
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
Netflix started the campaign on a positive note by capturing a larger customer base with DVD-by-mail business. The success was short lived due to increasing logistics and inventory cost. Also with the advent of digital era, DVD-by-mail fell out of favor. Netflix figured out the loophole and decided to tap into the online streaming market with content marketing. With exciting new features, constant updates and recent expansion of customer base by providing its streaming services in India, Netflix has only grown into a juggernaut.
We all know and love Netflix, you may have even seen a meme about "Netflix and Chill". Netflix is a wonderful thing that allows you to surf and watch numerous shows and movies over the internet from many different devices. In August of1997, all of our lives would be changed simply because in Scotts Valley, California, Reed Hastings and Marc Randolph had just founded Netflix. Reed Hastings supplied the firm 's startup cash of $2.5 million. He had reportedly hit upon the idea for rental by mail when he was forced to pay $40 in fines after returning an overdue videotape of the film Apollo 13 (Mathew). But it wasn 't as easy as you might think for Netflix to get to where it is today.
Netflix Inc. is providing on demand internet streaming media. The company was found by Marc Randolph and Reed Hastings in 1997 at Scotts Valley, California. The concept of Netflix came through Reed Hastings while he got fined $40 outstanding balance after returning Apollo 13 which was passed the due date. Netflix started with 30 employees and availability of 925 streaming contents. Officially, Netflix never released documents regarding its visions for the future. However, at the Dublin Founders conference, Reed Hastings has mentioned his plans and goals for the
Reed Hasting and Marc Randolph were veteran entrepreneurs and founders of Netflix in Scotts Valley, California in 1977. They offered DVD for selling and renting over the internet. In reference to Suite101 business profile, “Netflix’s mission is to transform the way people access and view the movies they love and they focus on value, convenience and selection” (Choudhary, 2010). Netflix subscribers who pay $19.95 for unlimited rent are more than one million. These subscribers must rent 3 DVD at one time. Netflix is the world 's largest online DVD movie rental service offering more than 26,000,000 members access to more than 100,000 titles.
Streaming technology has reformed the way people view entertainment today. Online streaming gives viewers control over when and how they watch their favorite TV shows and movies. Over half of smartphone and tablet owners use at least one television type of application at least once a month (Page, 2015). Services like Netflix, Hulu, and Amazon Prime offer access to shows via TV, gaming systems, smartphones, and tablets from any location with wifi. Netflix’s competitive strategy and accurate predictions of the future of streaming has made it the leader in its industry. Using the three circles analysis will show that by understanding its customers’ needs, its own offerings, and its competitor’s offerings, Netflix continues to dominate the industry and is moving towards the future.
Netflix is a company known around the world. It started with humble beginnings, and popped on the scene and not only reinvented the way we watch movies at home, but took over the industry. In this case I will analyze the Video-On-Demand or VOD industry using Porter’s Five Forces Model and conduct a SWOT analysis on Netflix. I will also discuss why Netflix has been so successful, what their competitive advantages are, some of my personal recommendations, and finally any strategic advantages CEO Reed Hastings should pursue on the future.