Netflix Case Study

In: Business and Management

Submitted By mrskadavis12
Words 638
Pages 3
Kelsey Davis
GBA 490
Professor Shelton
February 27, 2014
Netflix Case Questions
2. What forces are driving change in the movie rental industry? Are the combined impacts of these driving forces likely to be favorable or unfavorable in term of their effects on competitive intensity and future industry profitability?
The movie rental industry has many forces affecting it. A force that is driving change is always the possibility of potential new entrants into this industry. The movie rental market is growing at a fast pace with few obstacles blocking the competitors from entering the movie rental industry. This could easily dilute the market and pose a potential problem in the future. Another force that is driving the industry is the rivalry among competitors. The number of competitors in the industry is quickly growing. With products offered having little to no differences and the consumer’s cost of switching services very low this makes it a hard industry to compete for customers. Rivals will have to be creative and come up with diverse strategies for providing their services in order to survive in this industry.
3. What does your strategic group map of this industry look like? How attractively is Netflix positioned on the map? Why? When observing the strategic group map the movie rental industry, it is obvious that Netflix is in a great place on the strategic group map. Despite the obstacles Netflix has had to overcome it still holds a large part of the market share with the second largest geographical coverage. Netflix offers the largest variety of product in the industry, allowing subscribers to view both Hollywood and Sundance-type films along with TV shows.
4. What key factors will determine a company’s success in the movie rental industry in the next 3-5 years?
The key success factors within the U.S. DVD rental industry are as follows: maintaining…...

Similar Documents

Netflix Case Study

...Case 1 Netflix February 14, 2013 Netflix doesn't have a mission statement available online, but at the following values were published on a related website from a conference Netflix held. * Becoming the best global entertainment distribution service * Licensing entertainment content around the world * Creating markets that are accessible to film makers * Helping content creators around the world to find a global audience We promise our customers stellar service, our suppliers a valuable partner, our investors the prospects of sustained profitable growth, and our employees the allure of huge impact. Netflix also published company values, the following values are listed below: * Judgment * Productivity * Creativity * Intelligence * Honesty * Communication * Selflessness * Reliability Passion This is also available from their website, which could be viewed as a vision statement for our purposes. "Our appeal and success are built on providing the most expansive selection of DVDs; an easy way to choose movies; and fast, free delivery." Step 2: Developing a mission and vision statement for Netflix. They need to focus on expanding properly without stretching their weaknesses too thin they also need to perform well in getting more tittles. Mission: Netflix provides the highest quality and advanced streaming content to an ever expanding, global market. All while Netflix is...

Words: 497 - Pages: 2

Netflix Case Study

...Analysis of Strategy Analysis of Strategy Netflix Lauren Lane Strategy 10.15.12 Netflix Lauren Lane Strategy 10.15.12 Netflix was born from an idea in 1997 from Reed Hastings, in conjunction with his partners Marc Randolph and Mitch Lowe. As a company Netflix has derived its profits from a consumer’s ability to stream DVDs online as well as have them delivered to their house, completely remodeling the idea and process of video and television rentals. Netflix created a product that filled the void of instant media access to consumers, and created a product that makes video and television viewing a service that everyone could access and afford. For a monthly subscription fee, subscribers can rent as many DVDs as they would like and keep them for as long as they like while also being able to stream movies and TV shows online, giving them access to hundreds of thousands of options of what they want to watch. There are no due dates or late fees for the DVDs which was a change from the traditional way of movie rentals. 1. Identify the key elements of Netflix’s strategy. What competitive advantages is Netflix trying to achieve? Netflix created the perfect storm of a company that encompasses and produces a product accessible from multiple different mediums for consumers. A consumer of Netflix has the ability to keep to a more traditional way and continue to watch DVDs of their favorite movies, keeping to a tradition held in the world for many years. However...

Words: 3897 - Pages: 16

Netflix Case Study

...Netflix Case Study * Company Overview Netflix is the world's largest online movie rental service, providing more than seven million subscribers access to more than 90,000 DVD titles plus a growing library of more than 5,000 choices that can be watched instantly on their PCs. The company offers nine subscription plans, starting at only $4.99 per month. There are no due dates and no late fees – ever. All Netflix plans include both DVDs delivered to subscribers' homes and, for no additional fee, movies and TV series that can be started in as little as 30 seconds on subscribers' PCs. DVDs are delivered free to members by first class mail, with a postage-paid return envelope, from over 100 U.S. shipping points. Nearly 95 percent of Netflix subscribers live in areas that can be reached with generally one business day delivery. Netflix offers personalized movie recommendations and has two billion movie ratings. Although, very successful completion grows which are threats to the company. Netflix needs to create a strategy to be able to Partner with cable companies and networks such as HBO, Cinemax that do not license any of their series. They need to create a team hence forth, spend and analyze critically their hiring decisions. This team will be monitoring, evaluating and disseminating the information from the external and internal environments to key people within the organization. They need to create a pool of highly qualified experienced personnel that would efficiently and......

Words: 330 - Pages: 2

Netflix Case Study

...merges with Internet downloading. Netflix, an online subscription-based DVD rental company, entered the video industry with disruptive technology of offering online video rental while the incumbent competitors like Blockbuster were offering retail rentals. The incumbent competitors eventually followed Netflix’s direction when their core competencies were sabotaged by Netflix’s strategy. Moreover, Netflix was a technological leader that invested in new technologies like VOD. In this case study, we would be using SWOT method to analyze on Netflix Case. Discussing on its strengths and weaknesses, in particular to its survival in the hyper competition of video industry where there are dynamic and complex uncertainties and competitive advantages are not sustainable and also Netflix’s surrounding opportunities and threats with regard to VOD. We would be analyzing on possible alternatives on how Netflix can take up VOD market and end the report with a recommendation for Netflix. Problem Statement Video-on-demand (VOD), a service that allows users to select and watch video and clip content over a network as part of an interactive television system, is going to be the next biggest thing in the internet. It is going to become a norm in the industry or public and also a threat to Netflix existing business model, an online subscription-based DVD rental service, which depends on the internet to send out physical DVDs to their customers. How should Netflix enter the online video......

Words: 1785 - Pages: 8

Netflix Case Study

...Netflix: Identify and evaluate the impact of the forces that drive change in the movie rental industry on competitive intensity. How are these forces likely to affect the future industry profitability? All industries are affected by new developments and on going trends that alter industry conditions. It is important managers remain alert to such changes most likely to affect the strengths of Porter’s Five Forces (Crafting & Executing Strategy; The Quest for Competitive Advantage, p.77). By pinpointing and understanding the intensity of change driving forces, managers will be able to react in a timely manner, lowering costs and/or influence this change, which allows them to gain competitive advantage. We have identified and focused on the most powerful agents of change altering competitive conditions in the movie rental industry. 1) Increasing Globalization Due to the rising availability of high-speed Internet in many developing countries such as Latin America, streaming movies has increased over the last few years, expanding the consumer market and intensifying competition 2) Changes in an industry’s long-term growth rate The traditional movie rental method (physical DVDs) is on a steep downward trend. There is also an anticipated expansion of content distributors via the Internet increasing demand and rivalry for the Internet based movie-renting industry. Changes include the possibility of content providers digitally distributing their own content.......

Words: 782 - Pages: 4

Netflix Case Study influential as Netflix, building a service from the ground up that supports millions of different viewing opportunities for its subscribers in a variety of markets. Netflix however is not immune to rapidly changing marketplace in which it shares strong competitive competition. Multiple companies including; Apple, Amazon, Hulu, RedBox and others bring new options to the table for the consumer and place Netflix in the carious position to continuously rethink and develop its marketing strategies if it wishes to stay on top of the competition. This paper looks at several areas surrounding Netflix current market strategy and how it will likely fair against its competition moving forward. Along with looking at the current market strategy of the company focus will also be paid to Netflix’s past failures and success and the potential for continued success in the future. Keywords: Competition, Competitive Advantage, Marketing Strategy   Netflix Case Study In 1998, Netflix CEO Reed Hasting, along with software executive Marc Randolph officially opened Netflix for business. Hasting and Randolph realized the potential opportunity and perceived growth that the DVD market would have on the US entertainment sector. Further they were able to capitalize on DVD’s smaller size, in comparison to VHS, and developed an approach to deliver the new entertainment media to consumers via rent-by-mail service. While the DVD was becoming rooted in the US market, Netflix was able to build......

Words: 1962 - Pages: 8

Netflix Case Study

...Netflix Netflix Inc. had its start in 1997 when it was incorporated by its current CEO and founder, Reed Hastings. It was not until 1999 that Netflix finally began to rent movies to its customers. At its origin, Netflix was a DVD rental service that only rented through the mail. With this type of service, customers would pay a membership fee that determines the number of DVD movies that they were allowed to rent at a given time. Once the customers would choose their desired movies, the DVD’s were mailed to them and then returned whenever the customer finished watching them. In 2007, Netflix introduced the concept of streaming on-line videos to its customers which allowed for instant access to their inventory that was formatted for such viewing. With the on-line streaming, they were still offering their original DVD service through the mail. Netflix introduced this new service in the attempt lower their overall costs that was brought on by paying for the shipping and handling of the mailed DVD’s. In 2010, Netflix introduced only their on-line streaming service internationally to over 43 countries. In 2011, it was announced that Netflix would stop the combined services of streaming and DVD rental and instead offer these services in separate subscriptions. Their customer base was displeased and the company’s stock prices had experienced a major drop in a short period of time. During the same year, Netflix sold a portion of their stocks to mutual finds causing their......

Words: 2627 - Pages: 11

Netflix Case Study Hbr

...At the time of the case I would have been short on Blockbuster. The primary reason for this is that Netflix had entered a market seemingly dominated by Blockbuster and by employing a differentiation strategy and innovating, they were able identify a market that that no one had thought previously existed. During the time of the case, Blockbuster seemed like it was in still the growth stage but was also clearly approaching maturity in the industry life cycle. Once a firm reaches maturity and doesn’t pursue some type of incremental innovation strategy, the most likely next step is decline. On the other hand, Netflix was in the introduction phase of its industry lifecycle, having created a mail-order rental business with several differentiating aspects from a regular brick and mortar video rental chain. The fact that Blockbuster was slow to acknowledge Netflix as a potential threat at first and subsequently trying to imitate their business model speaks to the fact that they were desperately trying to “catch-up” and being reactive instead of innovating proactively. A clear example of this was one of Netflix’s hallmarks, the non-existence of late fees. When Blockbuster tried to imitate this feature, it did not have the intended consequences. Instead of increasing company performance through increased subscriptions, it resulted in tremendous financial losses for the firm. Also, as soon as the technology for video on demand systems began to appear, observers claimed that it would......

Words: 314 - Pages: 2

Netflix Case Study

...but larger companies do have the upper hand since they can order larger quantities to get a better deal. Rivalry among Competing Sellers There are very few competitors in the movie rental industry of which consist of Netflix, Blockbuster, and small businesses. These few control overall market share of the industry. The main competition is between Netflix and Blockbuster. Blockbuster is currently the leader in movie rentals until Netflix introduced their DVD’s by mail program and subscription based business model. Potential New Entrants There are little to no potential entrants into this industry. A recent entry into the movie rental industry is Red Box; they are a vending machine style movie rental. This market requires entrants to have large capitals to acquire movie rights along with fresh new ideas of movie delivery options. In my opinion, they are not strong at all. There are very few competitors that do control market share and a number of small businesses represent the remaining market share in the movie rental market place. Rivalry among competing sellers is common; the top competitors are Netflix, Blockbuster and local movie stores. Large stores such as Blockbuster have physical stores, unlike Netflix, are able to stock their stores with a larger number of available rentals for new releases, while small stores order much lower quantities. The threat of Potential new entrants into the movie rental marketplace places......

Words: 3503 - Pages: 15

Case Study - Netflix Rollercoaster

...Megan Welshymer BA 370 9/29/15 Extra Credit # 1 Case Study: The Netflix Rollercoaster 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, forced existing competitors, such as Blockbuster, to extend their services to include mail delivery, and inspired the very creation of Redbox. Regardless of all the competition, if Netflix can remain on the cutting edge of their craft, by continuously offering the latest releases and the most far-fetched options; they should be able to maintain their competitive advantage, because they offer a valuable, reliable service at a consistent price. 2. Reed Hastings’ strategic change and rapid reversal affected Netflix’s fourteen million customers in several ways. First, the company launched a streaming-only plan for $7.99 per month in November 2010, and increased the cost of each DVD plan by $1. Customers interested in both services, were...

Words: 809 - Pages: 4

Netflix Case Study

...Abstract The following is a case study of Netflix, Inc. an American-based company that provides the streaming of online media to consumers in North America, South America, and parts of Europe. This case study will provide a brief overview of the company’s history along with four present-day challenges that the company will face as it tries to stay ahead of the competition. In its discussion of the present-day challenges that Netflix, Inc. faces the discussion will also relate the proposed challenges to the managerial challenges of globalization, diversity, and ethics. After each of the four anticipated challenges have been addressed then this paper will provide an analysis of the steps that Netflix, Inc. has already taken to keep the company on the frontline of online media streaming. This paper will also provide suggestions as to what can be done in order for Netflix, Inc. to become the number one competitor and innovator in the market. Keywords: Netflix, challenges, analysis Past to Present In 1997 Netflix, Inc. was founded in Scotts Valley, California by Reed Hastings and Marc Randolph initially offering weekly DVD rentals online. Within two years Netflix, Inc. transitioned from offering weekly rentals to offering a subscription service that allowed consumers to rent movies as frequently as they pleased for a monthly fee. In a matter of ten years Netflix, Inc. began to offer the online streaming of media for a subscription fee and ended the year with......

Words: 2880 - Pages: 12

Netflix Case Study

...Report Case: Netflix January 19, 2016 1. To begin with, at a first glance, Blockbuster and Netflix may be considered two quite identical firms, operating in the movie rental industry. Therefore, it could be inferred that their business models have many similarities, yet, that is not the case. Their core differences are most obvious on their respective levels of value propositions, resources, and the profit formulas that each company has adopted. Firstly, Netflix’s initial idea behind their business model was to become providers of a better home movie service, which become feasible, in 1997, with the introduction of DVD technology. On the other hand, Blockbusters, a well-established company since 1980s, continued to follow the traditional retailing outlet style. A basic difference is the resources of their business models. In 1998, a year after its founding, Netflix boldly adopted a very innovative attitude by launching a website while simultaneously operating online. Thus, Netflix targeted the revolution of new age technology adopters (purchasers of DVD players), while Blockbuster’s main target group was wider, focusing on anyone who decided to watch a movie, especially last minute. The two companies’ profit formulas are different, with Blockbuster’s following the common charging system (a fixed price for every movie rental and additional charges for delayed returns), whereas Netflix, in its early uprise a......

Words: 1769 - Pages: 8

Netflix Case Study

...Netflix Incorporated, Case Study Marketing 101-H1 Assignment 2: Case Study Analysis Group 4: Jagvir Bagri, Michael Catalfamo, Tina Hoang, Jason Rudzki Submitted to Dr. Youssef Ahmad Youssef Humber College Business School September 27, 2010 Introduction In the summer of 2011, the co-founder and chief executive officer of Netflix Inc. Reed Hastings, made the decision to separate the companies online streaming service from the DVD rental service. The DVD rental services mails out DVD’s to customers one video at a time and the streaming service allows customers to watch movies and television shows via the internet. Instead of charging each customer a flat rate for both services, as it had in the past, Hastings wanted to charge consumers for each service as its own separate entity. This meant each customer would now have two accounts (instead of one), pay considerably more in membership fees and still receive that same amount of content.  Shortly afterwards, on July 12, 2011. Mr. Hastings, publicly announced the changes and informed his customers that they would come into effect in that coming September.   In 2010, the business reported revenues of more than two billion dollars and had approximately twenty-million subscribers. After Hastings announced the split, his stocks fell by more than fifty percent from a one time high of more than three hundred dollars per market share. Stocks in Netflix continued declining quickly and before the end of the year,......

Words: 1937 - Pages: 8

Netflix Case Study

...Summary Netflix is the world’s leading online streaming media company. By entering licensing agreements with major film studios, Netflix is able to distribute movies and TV shows online for a low monthly price. The 57 million streaming members in 50 countries can watch as much as they want from the content library, as long as they have an internet connected screen. Since 2007 they have pioneered delivery of TV shows and movies on a newly developed ecosystem that enables consumers to enjoy TV shows and movies directly on their TVs, computers and mobile devices. The company has three reportable segments: domestic streaming, international streaming and domestic DVD. The domestic and international streaming segments derive revenues from monthly membership fees for services consisting solely of streaming content. In the United States, members can receive DVDs delivered quickly to their homes, which is an additional 5.7 million users and 32% of net income even though it is on rapid decline. The domestic streaming content membership is 39 million members versus the international which is 18 million. In today’s market, there are several risk factors that Netflix faces and needs to handle to be competitive in the future. Some of these risks are the high licensing costs for the content they host, high reliability on other sources for streaming to customers devices and the need to constantly improve and innovate their corporate strategies (Netflix, 2013). Netflix......

Words: 2963 - Pages: 12

Netflix Case Study

...differentiate service and build brand equity. There are also government policies to reinforce the barrier. For example, in addition to its red envelops, Netflix has patents to protect essential characteristics of its business model such as its “Max Out” and “Max Turns” approaches. This creates cost disadvantages through a greater learning curve for new entrants, especially when competing against algorithmic programs such as Netflix’s CineMatch, which becomes more effective at recommending movies as more subscribers provide feedback. Another governmental restriction is seen specifically with, whereby distribution channels are choked out in the US unless Amazon sacrifices its competitive advantage of avoiding sales tax. The second force of competition, the bargaining power of the supplier, is assessed as moderate to high. The movie studios and independent movie distributors provide the rights to distribute unique movie products, and can bargain for the prices as buyers want to diversify their movie library to satisfy consumer demand. In addition, studios have tried to integrate forward into the video rental industry though Movielink, which offered the broadest selection of movies through digital download; furthermore, its digital distribution was not windowed to all channels. However, Movielink had less than 4% of the titles of Netflix. The third force of competition, the bargaining power of buyers, is assessed to be moderate. Although the movies are unique, the......

Words: 1295 - Pages: 6