Netflix Case Analysis

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?

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,

It appears that Netflix has control over the vast majority of the movie rental business. Consumers are renting less than they used to and the convenience that Netflix incorporates into its service, such as online streaming and mail orders eliminates other competitors from considering entering the movie rental business.

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.

Although, Netflix has dominated the industry for the past decade, its key competitors have the potential to surpass Netflix. Streaming services like Amazon Prime and Hulu, also have a strong brand name and brand equity. Although, Netflix still leads the pack in terms of members, its competitors still have a strong and growing customer base (Christian and Spooner, 2017). Currently, each streaming service offers and produces original content. Amazon is nearly doubling its budget for content (Low, 2016).

Brandon Katz, a writer for Forbes.com has an article he wrote during one of Netflix’s price increases in 2016 titled, “Netflix Price Increase Leading To 500,000 Cancellations?” (Katz). Losing 500,000 seems like a major loss no matter what you are talking about. In this case, Forbes writer, Brandon Katz is referring to an estimated number from Nomura Securities, of Netflix subscribers that would cancel their service to the online streaming company because of a monthly subscription price increase. With the increased availability to the internet no matter where we are, streaming services like Netflix, Hulu and Amazon Prime, have been able to charge fees in order to provide viewers access to large amounts of TV shows and movies. The reason behind the success of these services is the affordability of them versus traditional cable costs. USA Today writer, Mike Snider reiterates the cost of these services in his article, “Say you subscribe to all three major players, Netflix, Amazon and Hulu, as about 7% of subscribers to broadband-delivered TV services do, according to Parks Associates, an Addison, Tex.-based market research firm. Do that and your monthly cost is $28-$35.”(Snider). Taking this information into account, most people you talk to probably pay way more than $35 for their cable. The appeal to use the streaming services lies mostly in the cost and ease of use. As we go through more and more technological advances, the demand to have access to our entertainment wherever we are increases. This causes the demand for streaming services to constantly step up their production in order to please their customers. An article on CBS News written by Irina Ivanova states, “67 percent of people reported using some sort of video streaming service, such as Hulu, Netflix (NFLX) or Amazon (AMZN) Prime video. Only 61 percent said they had a cable subscription at home”(Ivanova). The use of cable is slowly decreasing while the use of streaming services is increasing. This means that people are slowly transitioning from one to the other. In most recent news, video streaming powerhouse Netflix, recently released a statement regarding a 10% price increase that will be hitting their client base near the end of the year. In the

3) Bargaining Power of Suppliers (+)( Netflix’s movie inventory is supplied by movie studios through direct purchases, revenue sharing agreements, and licensing (C-104). Studios appear to have a fair degree of bargaining power as they are selling a unique product not a commodity. Therefore, suppliers are seen as having a moderate threat. If a studio produced a successful movie, the subscribers of Netflix will expect to have the ability to rent that particular title. Netflix may attempt to form collaborative partnerships with more successful studios that produce a lot of new release “hits.”

Through innovation, the media streaming provider, Netflix, has achieved competitive advantage in the global market. Netflix operates as a provider of a subscription service for streaming movies and television episodes over the Internet. Originally founded in California in 1997 as a mail order DVD rental service with a flat monthly subscription rate, allowing consumers to benefit from an unlimited number of rentals and no late fees, Netflix has grown to dominate their market and experience minimal direct competition by seizing the “first to market” competitive advantage. Now known as the primary provider of Internet only streaming media, Netflix has grown to have a market capitalisation of US$41.1 billion (as of May 2016) from their previous US$3 billion (in January 2013).

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.

3. Create a Customer Base (Expand Social Network) to improve the services of Netflix. The entire business relies on subscribers. If they don’t feel as if they are important, they will hesitate to continue paying their fees. Also, being able to communicate with the customers will create a more friendly and personal atmosphere. Starting up a chat room on Netflix to discuss what

In late February 2005, Netflix, the pioneer of the video rental business, faced a threat when Wal-Mart and Blockbuster attempted to copy their business model by launching their own online DVD rental service.

Netflix is a popular and affordable choice for film entertainment enthusiast and has seen significant growth in just over decade. As a novice and avid Netflix subscriber, we have found a company that has found its target market in our home. It appears that Netflix founder, Reed Hastings, made the right business moves at the right time. He entered the market at a time when he could have found himself failing to succeed. Realizing that the demand for instant streaming was a bold move in the late 1990’s when the internet and personal computers were still new and a developing phenomenon. A risky business venture proved to dominate the