Netflix Is The Worlds Leading Internet Television Network

There are basically six technology-driven threats to the traditional rental model: (1) Cable companies offering Video on Demand (VOD), (2) online movie downloads, (3) online movie rentals, (4) disposable DVDs, (5) illegal movie downloads and DVD copying, and (6) Digital (or Personal) video recorders (DVR). (Jackson) One could also consider traditional pay-per-view (PPV) as and additional substitute. Only one of these seven, online movie rentals has proven to be a major competitive substitute for traditional movie rentals. All other areas, except traditional pay-per-view are expanding rapidly, but some face significant challenges.

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.

Blockbuster implemented a new strategy for customers to access their rentals in “five channels of distribution: in-store, by mail, through vending machines and kiosks, online, and at home (direct to the TV)” (DATAMONITOR, 2009). However, this strategy was a reactive approach to the problem produced ten years behind schedule. Wooldridge et al., (2007) stated that Blockbuster should select and adapt their strategy to respond to the fast changing market and maintain a competitive position. This was an obvious failure for Blockbuster. The changes in the market produced a decline in profit at a faster pace than the strategies that Blockbuster implemented to combat these losses.

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,

Entering and transforming the video rental industry was a large undertaking for the start-up company. The first marketing objective the company undertook was the process of building a brand. Netflix’s identity was crucial to future growth and success. Without a strong brand, competitors with deep pockets could have easily duplicated the company’s business model. Secondly, leveraging technology was critical to establishing the business and infrastructure growth. The consumer base was the final objective Netflix sought to achieve. Retaining and growing subscribers were fundamental to revenue and marketing goals.

One of the distinguishing factors between Netflix Inc. and other video rental companies is their decision to bypass the traditional “brick and mortar” retail route and delivering their product from the warehouse directly to the customer. Netflix learned that they could cut cost by utilizing the internet for

In its prime, Blockbuster Video held a considerable advantage in the video rental industry. The company’s large presence within the industry allowed for the company to build a competitive advantage through its ability to reach a much larger consumer base through multiple channels as well as hold the majority of shares within the market (Harress, 2013). Unfortunately, the company was not able to sustain this advantage long term for a multitude of reasons.

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

Strengths Brand name - Netflix has established a brand name that is widely recognized and many studies have shown that the company has a stronger brand identity among its competitors. It serves more than 65 million users in over 40 countries, Netflix is the dominating subscription streaming video service. They have the largest collection of videos and continues to build up its library with its own original content and higher quality movies. Netflix has become the most favored subscription video streaming service in America, and is found in more than 36% of U.S. homes as compared to its competitors such as Amazon Prime Instant Video at 13% and Hulu Plus at 6.5%. The name itself, is intertwined with the online movie streaming industry. Large amount of content – Not only does Netflix have a variety of content from well-known companies such as Disney, it also has international and original content as well. Netflix streams 4,335 movies, 1,197 shows, and 133 movies and shows of its own original content. Some of Netflix’s well know pieces include “House of Cards” and “Santa Clarita Diet.” This mix of original and well-known content contributors creates a loyal customer base.Easy user experience/platform – Netflix has devised a way to use specific algorithms to collect data in order to adapt itself to each user uniquely. This cuts down on the time users need to invest when searching for specific content. If the user doesn’t find the content they are looking for in this manner, Netflix also separates its content into categories, making it easy for users to simply search for the types of movies or shows they would like to view. A user can also search by title name in the search bar or search by genre. Netflix can even personalize each user experience by allowing their customers to create multiple viewer profiles.

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.

Before the advent of movie rental stores, to watch a new movie, people had to go to theatres or cinemas spending a lot of money. Video rental was the answer to the new needs. Since the 90s, video rental industry has become a very big business; in those years, rental prices rose as more and more people began renting movies. At the same time, new players entered the market creating strong competition inside the industry. In the last years, the field of home entertainment has changed dramatically because of the presence of Internet and new technologies (Recorded DVD & Video in the United States, 2009).

Video-on-demand or VOD, a service that allows users to select and watch videos over the internet, will be one of the greatest innovation as stated in the Netflix case study. It will be a great opportunity for Netflix, but it will also be a challenge to integrate or do away with its current business model. Its current business model is one that relies on the internet and the post service to deliver DVDs to its subscribers. Netflix should carefully enter the VOD market without doing away with its current model. This will allow it to maintain its growing position as a giant in this media industry. In order to better understand Netflix and the problems it faces, we must first identify its strengths. What does Netflix offer its customers that its competitors do not? What differentiates it from its competitors?

In many ways, Netflix is an amazing company to analyze. By being disruptive, the company has changed drastically the disc rental business and the streaming industry. In addition, the ecommerce business model Netflix has developed was one of a kind, focusing mainly on the consumer’s needs and experience. Now, it might seem obvious that ecommerce marketers should focus on these aspects but at the time it was a first.

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

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