Netflix, An American Internet Media Provider, Using Porter 's Five Model And The Concepts Of Value Chain

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, an internet television network that is revolutionizing the way we watch TV series and movies without having to leave the comfort of our couch has over 50 million subscribers in more than 40 countries.

Netflix, Inc. is a U.S. based leading company that operates as an online movie rental subscription service provider who went public in 2002. Netflix initially started off as a DVD rental service through mail only, then later initiated streaming around 2007 in the U.S., and internationally around 2010. Netflix subscribers can instantaneously watch a series of movies and a variety of TV shows streamed from their website online to users TVs, and other devices. Netflix operates its business through domestic DVD, domestic streaming, and international streaming. Netflix subscribers typically pay $7.99 once per month for unlimited use of the website features. Netflix obtains their streaming’s from Amazon Web Services and other communication delivery networks for their streamed content and direct purchases from a nationwide network of U.S. shipping centers. Netflix Inc., headquarter is at Los Gatos, California. Two entrepreneurs Reed Hastings and Marc Randolph founded Netflix on August

Effective value chain as a competitive advantage can contribute significantly to the prosperity of a firm in the competitive arena, but it can cause dire situations if not operated properly (Guy, 2011). However, there are conflicts among companies as to how stakeholders think they gain competitive advantage. Porter (1996) suggests: A company can outperform rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers or create comparable value at lower cost or do both.

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

Netflix also initiated the streaming video and television shows through the internet to your television, computer, or gaming system. The selection wasn’t as big as the actual DVD mail-order system, but it was faster and more convenient for some customers who “wanted it now”. This was all offered to the customer in a low monthly fee. Some subscription services even allowed for unlimited rentals per month.

This report analyzes the company Netflix to determine whether or not it makes a good investment at this time. Netflix was founded in 1997 in California. The company launched its website that same year, at the time the company was composed of only 30 employees and had close to 1000 DVD’S available to rent. Netflix was one of the first company’s to offer rental DVD’s on a monthly subscription basis rather than having to pay per DVD. The year 2007 was a big year for Netflix and its first step toward its new business model. Netflix moved away from renting DVD’s and instead shifted to video on demand via the Internet. Today, Netflix holds the spot as the world’s top Internet television network; with almost fifty million subscribers in close to fifty nations who enjoy hours of TV shows and movies every month. (Netflix)

For this paper, I chose to analyze Netflix as it piqued my interest more than others. Netflix is one of the leading Internet streaming media that provides entertainment primarily through movies, series, and documentaries. For monthly subscription price of between $7.99 and $11.99, Netflix users from all over the world have the privilege to instantly access movies and television shows streamed over the Internet on any of their devices including laptops, tablets, iPads, or even smartphones. Netflix’s vision statement says, “Becoming the best global entertainment distribution service; Licensing entertainment content around the world; Creating markets that are accessible to film makers; Helping content creators around the world to find a global audience” (Farfan 2015).

Netflix previously had a plan in which it included both online streaming, as well as unlimited DVDs by mail, 4 out at a time, for $9.99 a month (Gregory, 2011). However, in July of 2011, CEO, Reed Hastings, announced that they were going to separate the online and DVDs plan and charge

the need for a retail store in every city. Netflix functions in a virtual environment

Netflix, the online subscription-based DVD rental service aimed to better satisfy customer in a way competitors didn’t, customized and personalized service with unlimited monthly rentals from a great variety of film offerings. Now they want to leverage their strengths to enter into the Video on Demand market

“Netflix, Inc. is the world's largest online movie rental service, with more than 10 million subscribers (Netflix Media Center, 2009).”

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

Netflix was founded by Reed Hastings and Marc Randolph in 1997 and was originally based out of Scotts Valley California. The business model that they were working towards was to create a company that would offer online movie rental service made available by streaming media as well as DVD’s that could be ordered online and delivered to the customers’ homes. (Wheelen, Case 12). Netflix had a strategic plan to undercut the competition in an effort to stress the market and force weaker competition out of the field. This was a very successful plan and over a period of years it was able to force the closings of most of its competing market to include the mega giant Blockbuster video. Using a business

Starting off as a mail-only service in August of 1997, the service rapidly bloomed into an online, paid source for thousands of movies, series, and other TV shows. Although their streaming option is the most favored, Netflix still offers users the opportunity to order DVDs and other forms of tangible movies. All in all, Netflix holds a multitude of positive and negative effects on society, both which include instant accessibility, immediate forms of entertainment, binge-watching, and unproductivity. Lastly, Netflix may soon become an overwhelmingly large company that takes the television and video distribution industries by storm due to its growing popularity and its ability to be cheaper than regular cable