Netflix Essay

863 Words May 29th, 2010 4 Pages
Introduction:
Netflix is an online subscription based DVD rental service, founded in 1997 by Marc Randolph and Reed Hasting. Has more than 90,000 DVD titles, 6.7 m subscribers. Have a Growing library of more than 5,000 choices that can be watched instantly on their PCs and have They have over 55 million discs and ship 1.6 million a day, on average.

Business Model and Strategy:
They are first movers in the field of online rental and are the blue chip company in this field, also they concentrated on DVD as compared to VHS system of the time. They positioned themselves as a online company different from a brick and mortar one. It offers prepaid subscriptions as the customer only need to pay monthly fees for unlimited rentals. It doesn’t
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They went into contracts with their movie suppliers to reduce the cost of the movies purchased and forming a long term relationship with their suppliers.
DVDs sent home through U.S. Postal Service, being a huge customer for USPS they have formed a alliance with USPS to get benefits. They worked with USPS not only to reduce charges but saving times as the Netflix envelopes were not returned to the original distribution centre but to the closest ones.
Netflix also became a source of adverstisement for films not on huge budgets in helping creating awareness about the movies. PROBLEM VOD VOD, which refers to Video-on-Demand, is the recent video streaming technology where pay-per-view programming merges with Internet downloading. Netflix has the challenge of entering VOD market or not and how that would alter its business structure and strategy as its purpose was to allow best home video viewing to its customers. As Netflix faces serious competition from its competitors including Blockbuster, Disney etc the decision is critical to not only profitability but also survival as the question is how should Netflix enter the online video market? Any decision made on this issue would impact not just the Netflix existing business model but its ability to sustain its position as a giant in the media industry. Also its competitors have started

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