Netflix Versus Blockbuster Versus Video-on-Demand

1780 Words Apr 30th, 2008 8 Pages
Netflix versus Blockbuster versus Video-on-Demand
Case Analysis by Ken Akerman

Strategic Issues in the Case

Founded in 1999, Netflix is an online DVD rental service whose strategy and market success were predicted on providing an expansive selection of DVDs, an easy way to choose movies, and fast, free delivery via postal mail. The company’s strategic intent was to be the world’s largest and most influential movie supplier. The goal of the company was to make it a lot easier for customers to select and rent movies and to eliminate the hassles involved in picking up and returning them. Its strategy incorporates customer convenience and a wide selection of entertainment selections. Netflix provides extensive information to its
…show more content…
As the leading company in the field of online video rentals, it was wise for Netflix to develop a strategic alliance with the largest retailer overall, Wal-Mart. Netflix’s business model is well-suited for success in renting DVD’s but it is more difficult for Netflix to attain success selling DVD’s using this model. Selling DVDs could be highly profitable but requires more precise inventory control and presents greater risks. The company could be caught short-handed if it has insufficient inventory of very popular titles but could be stuck with excess inventory that it would need to unload at a loss if it orders too many titles of a DVD that turns out to be less popular than expected. Wal-Mart is noted for its mastery of inventory control and supply chain management so it is the ideal company with whom to partner with to sell DVDs online, and Wal-Mart has numerous large brick-and-mortar stores in all regions of the USA where people can buy most popular titles right away. Partnering with Wal-Mart also eliminates a prime competitive threat and puts the tremendous resources of Wal-Mart in partnership with Netflix.

Alternative Courses of Action

Among the alternatives for Netflix to consider would be to build NetFlix stores, adding a brick-and-mortar component to its online business. This would enable people who prefer visiting and renting from traditional video stores to go out to such stores and pick

More about Netflix Versus Blockbuster Versus Video-on-Demand

Open Document