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 financially successfully. Netflix lost over $11 million in 1998 and as a result significantly changed the business model in 2000. The new strategy included focusing on becoming a nationally based subscription model and focusing on enhancing the subscribers experience on their website. The change in strategic focus has allowed Netflix to grow into the largest online entertainment subscriptions service in the United States with over 6.3 million subscribers (Netflix).

Netflix first grabbed the attention of many customers when, unlike the local video rental store, they eliminated due dates and late fees charged by traditional video rental stores. The Netflix model allows customers to pay a monthly subscription fee for which they receive as many movies as they want in a month. The subscribers order DVD’s via the firms website and delivered through the United States Postal Service. Subscribers keep the movie as long as they want and when finished return it to Netflix in a postage paid envelop.

Netflix’s derives a much of their competitive advantage from their ability to offer each subscriber convenience and a personalized experience. The firm’s CineMatch software gathers data from subscribers’ online profiles, movie rental history and a subscriber’s movie ratings to develop a personalize list of recommendations. The recommendations serve to create a customized video rental store for each subscriber. By offering suggestions from the over 75,000 titles the firm provides the subscriber with a significantly increased likelihood that they will find a title that is acceptable. Titles are then added to the firm’s patented dynamic queue system. Subscribers use the queue system to create and modify a prioritized list of movies they wish to see. Subscribers simply return a movie and are shipped the next title in their queue (Netflix SEC).

The CineMatch software also allows Netflix to maximize their library utilization. Increasing the demand for older or smaller market movies not only assists Netflix in better meeting subscriber demand but also decreases the payout of revenue sharing that often accompanies the most popular new releases. Netflix has revenue sharing contracts with most of the major movie studios. Under the agreements the firm pays a percentage of the subscription fees for a predetermined period of time in exchange for receiving the most popular titles at a considerably discount over the whole sale price (Netflix SEC).

Netflix inventory of approximately 75,000 is significantly...

Find Another Essay On Netflix Case Study

Netflix Essay

4714 words - 19 pages guilty and convicted several months ago, with a monstrous number of more than 3.5 registered users. (Cable News Network, 2009) Besides, the telecommunication technologies had been developed rapidly. There were no reassurances that there would be no newer and more convenient substitute of DVDs and VODs in the nearly future. Similar to the case of Blockbuster and Netflix, if a new technology had been released and Netflix neglected the potential of

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

Blockbuster vs. Netflix: Which Will Win Out?

839 words - 3 pages that either Blockbuster or Netflix will succeed in the future. The reason being is because the entire video industry is now headed towards a digital environment. According to the information given in the case study, there are already 15 million cable subscribers using the video-on-demand (VOD) and could soon make the rental of movies obsolete". Furthermore, the entrance of Apple and the increasing amount of downloads being offered by BitTorrent is

Netflix Inc.

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 SWOT

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

netflix caso

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 Strategy

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

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

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

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

Similar Essays

Netflix And Facebook: A Case Study

1639 words - 7 pages customer loyalty making a company’s products and services increasingly irresistible leading to repeat purchases and higher profitability as well as reduced customer servicing costs. Netflix Incorporated: An Overview According to Allen & Vicente (2012), Netflix was co-founded in 1998 by Reed Hastings and Marc Randolph. Hastings came up with the idea of disc-by-mail service after he was forced to pay a $40 late fee for a VHS movie rental of Apollo

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

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 Essay 1938 Words

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