Netflix Essay

4714 words - 19 pages

IntroductionFounded in 1997 by its current CEO, Reed Hastings, in 2009, Netflix (Nasdaq: NFLX) was the world’s largest online subscription-based DVD rental company based in Los Gatos, CA. It offered its 10 million customers an access to more than 100,000 DVD titles in more than 200 genres. Starting at $9.99 per month, different price levels were currently offered by Netflix, each which allows its subscribers to possess different amount at a time with no late fees. (Netflix, 2009) By the time the Netflix was launched, Blockbuster Inc. (NYSE: BBI), the biggest mogul in the video rental realm foresaw Netflix’s attempt to pioneer its online rental services as a futile endeavor, since it was believed that video rental customers would not desire to wait for days for the DVD. Nevertheless, Netflix had proved Blockbuster’s assumption wrong. In the year of 2008, despite the downturn of the U.S. economy due to the subprime mortgage crisis, still, Netflix, one of a handful of companies that had their stock prices rose over the dreadful year of 2008, enjoyed a 6.72% rise in its average stock price, whereas Blockbuster suffered a 66.75% loss. (Google, 2009)One of the most intriguing key to Netflix’s success was its ability to predict the future. In 1997, by the time that Netflix was launched by Hastings, most of video rental services only offered VHS videotapes to be checked out, in addition, DVD players had been released for several months. Nevertheless, Hastings firmly believed that the DVD rental services would be highly profitable in the next couple of years. Regardless whether he was lucky or not, he was right!What were Netflix’s secret recipes for its astonishing success? In this paper, Netflix’s strategies will be analyzed using Porter’s Five Forces model and other analyses as the tools.
Business Models analysesPorter’s Five ForcesDeveloped by Michael E. Porter, a professor at Harvard Business School in 1979, Porter’s Five Forces is a simple model which depicts a business’ competitiveness into five vital factors that are interrelated to each other, which employs a key role in a success of an industry. The five forces are buyer power, supplier power, barriers to entry, threat of substitutes and rivalry. (Wikipedia, 2009)Buyers Power – As well as Dell’s highly praised supplier power, Dell Computer Inc. was also eulogized for its customer services. It offered a quality on-site service which had attracted many customers and built brand loyalties for it. Again, from the profit equation above, revenue is another determinant that is directly proportional to the profit, and of course, the source of a firm’s revenue is from customers. In all industries, intuitively, consumer buying power has a strong direct relationship with the U.S. economy. If the economy grows (i.e. real GDP increases and the unemployment rate decreases), consumers will tend to spend more. On the other hand, if the economy contracts (i.e. real GDP shrinks and the unemployment rate...

Find Another Essay On Netflix

Netflix Strategy Essay

621 words - 2 pages Netflix: Strategy Issue The dilemma which Netflix currently faces is to develop a strategy which will allow them to survive in this competitive industry. They must formulate a plan which allows them to achieve sustainable growth and protect their position in the DVD rental industry. Analysis Industry The DVD rental industry is extremely fierce. DVD rental revenue is expected to be $9574 million by the end of 2006 (Thompson et al, C-66). The

Netflix Inc. Essay

1361 words - 5 pages Netflix Inc. Company Background Netflix Inc. incorporated in 1997 and made its first public offering in 2002. Netflix is an online movie rental service which provides its 3,000,000 subscribers access to over 40,000 DVD titles. Although Netflix stocks nearly every title available on DVD, it does not stock titles containing adult content. The Netflix program allows subscribers to rent as many DVD’s as they want, and keep them for as long

Netflix, Inc

3035 words - 12 pages Devin SimmonsAccounting PerspectivesProfessor Stolberg10/31/2014Complete Legal Name:Netflix Incorporated (Netflix, Inc.)My Interest in the Company:I am interested in this company because I am an avid user of their product. I have been a customer of Netflix since I started my college career (6 years). Netflix has a seemingly unlimited number of movies and TV show, which is perfect for the time I get to relax. In my opinion, Netflix is a staple in


1938 words - 8 pages Gestión Estratégica 1er Trimestre 2014 / Campus SantiagoCASO N°1Análisis Estratégico de NetflixAutores: Profesor:J. Hernán Arce Jaime Rubín De Celisjarce@ug.uchile.clIngeniería ComercialPatricio Panellapatriciopanellaa@gmail.comIngeniería ComercialWilliams Rojaswilliamsrv22@yahoo.comIngeniería Civil IndustrialRoberto Sanhuezar.sanhueza.tri@gmail.comIngeniería Civil

Netflix vs. Redbox Industry

1016 words - 5 pages How is it that Netflix and Coinstar’s Redbox have thrived in the DVD rental business and brick-and-mortar companies like Blockbuster were forced into bankruptcy protection? According to CEO and founder Reed Hastings, value is the reason. As we know from class, value is defined by customer/consumer and companies that offer value turn buyers. One great example of a company’s value turning buyers into lifelong customers is Apple. Apples success

Netflix Marketing Plan

4707 words - 19 pages Netflix Marketing PlanMarketing plans play a vital role in the creation of new products or services. Whether it is a new organization or an existing one looking to add a new product or service a marketing plan is needed to help insure effective, efficient, and prosperous results. This can be seen in the development of the new video game rental service offered by Netflix. NetflixNetflix is the world's largest online DVD movie rental service

Netflix Case Study

1434 words - 6 pages Netflix Case Study The video rental industry began with brick and mortar store that rented VSH tape. Enhanced internet commerce and the advent of the DVD provided a opportunity for a new avenue for securing movie rentals. In 1998 Netflix headquartered in Los Gatos California began operations as a regional online movie rental company. While the firm demonstrated that a market for online rentals existed, it was not

Netflix competitive analysis

506 words - 2 pages Competitive Analysis Blockbuster Inc. and Movie Gallery are currently the two strongest competitors in the market, and therefore pose the biggest threats to Netflix. Amazon, Intelliflicks, and Cleanfilms are all present in the market, but don’t possess enough force at this time to be considered a threat to Netflix. Blockbuster As of right now, Blockbuster is the biggest competitive threat to Netflix. Blockbuster was incorporated in 1989 in

Marketing Mix Netflix

1469 words - 6 pages determined.One very successful company that utilizes the 4 Ps of marketing extremely well is Netflix. The company almost singlehandedly brought its competitors to their knees. These companies, including Blockbuster have since recovered and began offering a similar service, but Netflix had the marketing plan in place and rolled it out so efficiently that it really caught its competitors by surprise.Netflix is a little tricky when it comes to the product. It

Netflix"s Approach to Marketing

1280 words - 5 pages After receiving a ridiculously high fee for returning a movie late, Reed Hastings said that there had to be a better way to rent and watch movies and TV shows from the comfort of their own homes. Hence, in 1997 Reed Hastings and Marc Randolph, a software executive, co-found what is known today as Netflix, “the world’s leading internet subscription service for enjoying movies and TV shows,” (Netflix, Facts). The purpose of this paper is to the

Blockbuster vs. Netflix: Which Will Win Out?

839 words - 3 pages as the market leader in video rentals, a goal in which they succeed in 2004 when they had 40% of the market share. They were able to achieve this result by creating unique custom software that were design to simplify the rental and sale transaction of the videos. However, the creation of Netflix forced Blockbuster to change their business model by adding in a monthly subscription at a lower price than Netflix. Furthermore, Blockbuster tries to

Similar Essays

Netflix Essay

3800 words - 15 pages Case study 2 - NETFLIX 16Nova Southeastern University H. Wayne Huizenga School of Business & EntrepreneurshipMGT-5090 Entrepreneurial and Strategic ThinkingAssignment for: MGT-5090 Entrepreneurial and Strategic ThinkingSubmitted to: Dr. Joel E. RodgersSubmitted by: Frank Russell (Russ) CookDate of Submission: October 31, 2014Title of Assignment: Case Study 2 - NetflixCERTIFICATION OF AUTHORSHIP: I certify that I am the author of this paper

Netflix Essay

2080 words - 8 pages InitializeThe subscription business model is a business model that was pioneered by magazines and newspapers, but is now used by a myriad of businesses. Rather than selling products individually, a subscription sells periodic (monthly or yearly) use or access of a product or service (Bremner, 1999). Thus, a one-time sale of a product becomes a recurring sale and builds consumer and brand loyalty. Netflix is an example of this model. Netflix was

Netflix Essay

967 words - 4 pages Our article, "How Netflix Reinvented HR" by Patty McCord describes how Netflix has taken classical theories of organizational behavior and reinvented itself to work in a modern society. Patty McCord, the former chief talent officer of Netflix, learnt through years of experience that their company's approach to talent and culture worked for two reasons; success and common sense. Patty describes five key ideas that defined the way the company

Netflix Swot Essay

1352 words - 5 pages Can you name the largest online entertainment subscription service? If you said “Netflix” then you are correct. Netflix started in 1997 by Reed Hastings and the subscription service started in 1999. The company headquarters is based out of San Francisco, California. There are over 100 shipping location in the United States. Netflix offers over 100,000 DVD titles and over 8,000 that are ready to be watched instantly on a subscribers PC