Netflix Strategy

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NETFLIX: A COMPANY ANALYSIS

Table of Contents
I. Wall Street Journal Article and Executive Summary ..4 I A. Wall Street Journal Article 4 I B. Executive Summary ..5 II. External Analysis ..7 II A. Industry Definition ..7 II B. Six Industry Force Analysis ..8 II C. Macro Environmental Forces Analysis, Economic Trends, and Ethical Concerns ..15 II D. Competitor Analysis ..17 II D. 1 Netflix’s Competitors ..17 II D. 2 Netflix’s Primary Competitors ..17 II D. 3 Primary Competitors’ Business Level and Corporate Level Strategy ..18 II D. 4 How Competitors Achieve Their Strategic Position ..18 II D. 5 Willingness to Pay ..21 II D. 6 Comparative Financial Analysis ..22 II D. 7 Implications of Competitor Analysis ..23 II E. Intra-Industry
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The new agreement addresses the shifting preferences of consumers who appear more reluctant to buy DVDs in a shaky U.S. economy and a wider array of entertainment options. Terms of the latest deal also cover Warner Bros. titles made available for streaming to Netflix customers. Streaming is an increasingly important part of the company 's strategy in the digital age; the number of subscribers who streamed a movie or television episode from Netflix jumped by 20% over the third quarter of last year. Warner Bros. Home Entertainment, owned by Time Warner Inc. (TWX), announced its intention several months ago to renegotiate terms with Netflix. Time Warner Chief Executive Jeff Bewkes told investors in September that the previous deal 's economics didn 't "make sense" for the studio. Most DVD sales come in the first weeks of a title 's release. In October, Netflix CEO Reed Hastings said his company would not be opposed to a "sales-only" window of about a month at any studio, as long as Netflix could reach favorable terms. "We 've been discussing new approaches with Warner Bros. for some time now and believe we 've come up with a creative solution that is a 'win-win ' all around," said Ted Sarandos, chief content officer for Netflix, in a statement. Ron Sanders, president of Warner Bros. Home Entertainment, said "The 28-day window allows us to continue making our most popular films available
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