Netflix : The Development Of Information Technology

817 Words4 Pages
Summary As the development of information technology, most companies apply IT to improve their competitive power among the very intense market environment. IT can help a company to reach its target market more efficiently and profitably. With IT, companies are able to manage their businesses with modern technology, maintain the high standards of their daily operation and high efficiency and customer service. This paper is going to discuss what IT Netflix has applied and analyze its influence. How Netflix use IT to develop a competitive advantage, and what should be improved in IT area in the future. Introduction Netflix is an online DVD rental company. It was founded in 1997 in California starting its business by subscription-based…show more content…
Netflix is expanding in to overseas markets, including Canada, Norway, Denmark, and Sweden by the end of 2012, and the numbers are increasing extremely. It has approximately 3.6 million subscribers in its oversea markets (Land, 2012, August 15). Bargaining Power of Suppliers The supplier’s power is weak. At first, Netflix was just a small business on Home Video Market and had no relationships with major studios. Netflix had to pay up-front for new releases. In order to decrease this high cost for building the company’s movie library, Netflix hired Ted Sarandos, who had worked at other major video rental stores and had good relationships with other major studios. Based on his working careers before, Netflix got good discounts from nearly all the major studios. Threat of Substitute Product The threats of substitute products are medium. Although there are many choices for customers to choose and watch movies, most customers prefer watching movies at home through renting them or internet streaming channels. It is much cheaper, more comfortable watching movies at home with family members or friends rather than buying high priced tickets of the theater. Maybe in a few years ago, the threat of substitute product was cable. Customers could watch movies through a big screen TV, with charging an additional fee for cable subscribers and limited selections of movies. But now, under the development of online streaming channels, subscribers of Netflix also could watch
Open Document