StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Netflixs Business Model and Strategy - Case Study Example

Cite this document
Summary
The company that is the subject of this paper "Netflix’s Business Model and Strategy" is Netflix launched by Reed Hastings in 1999. It was launched at a time when the fascination for watching movies at home through DVDs or by lesser subscriptions was at a peak (Thompson 280)…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER93.5% of users find it useful
Netflixs Business Model and Strategy
Read Text Preview

Extract of sample "Netflixs Business Model and Strategy"

There was a scheme whereby any new subscriber would be allowed access to its movie library on one month trial basis. After this, the subscriber is automatically taken as a subscriber unless he cancels the subscription personally (Thompson 282).
  1. Marketing tie-ups- Netflix had entered into a deal with a company named Startz Entertainment and made tie-ups with entertainment content providers such as Universal Studios, Twentieth Century Fox, Indie films, etc that gave the subscribers access to several new movies at the same amount they paid (Thompson 284). This move was taken to increase the popularity of the company.
  2. Quick delivery to subscribers- Netflix made it a point to deliver the ordered DVDs to the subscribers within one business day after the order is placed (Thompson 286). For this, the company formed several regional centers that helped to deliver the DVDs in a very short time. This was a strategy to increase its popularity amongst customers.

Netflix is trying to achieve a competitive advantage in three areas:

  1. The company has a fast-mover delivery system on its online subscriptions. This has been done by setting regional bases in several areas. Also, by placing orders online the company made watching movies cheaper (Thompson 286).
  2. The company had a patented way for its web-based selection of DVDs.
  3. The company was more customer oriented and relied on monthly subscriptions of the movies streamed which was much cheaper than any other form of movie watching.

 

Answer 2

The number of competitors who control the rental market is very few. Thus, the movie rental marketplace has a strong competitive force.

(a) Threat of Substitutes

There is little scope for the threat of substitutes as the only available threats would be in the form of websites that would allow people to watch movies online illegally (Thompson 278).

(b) Barriers to Entry

There are fewer threats from new entrants into the market place and Netflix enjoyed a market leader position there. Making movie steaming and renting cheaper involves huge money and this would not be easy for any new company in a short time.

(c) Buyer Power

The buyer power is strong as they can cancel any subscription at their will.

(d)       Supplier power

The supplier power is strong as there are few companies in the movie rental market place and it would be costlier as well as nonprofitable to switch suppliers.

(e)        Degree of rivalry- the degree of rivalry can be strong as there are fewer companies operating in the market. Rivalry can also arise from other sources such as cable and satellite companies (Thompson  281). 

 

Answer 3.      

SWOT analysis of Netflix

Strengths – the strengths of the company lie in its fast delivery and huge collection of movies. The company also got huge customer satisfaction as it had around 16.3 million subscribers (Thompson  287) and strong brand recognition.

Weakness – the company relies on fast delivery of DVDs. This can cause some of the products to arrive in a broken or scratched form which can reduce satisfaction. Also, the monthly subscription can discourage people who watch fewer movies.

 Opportunities –the company has expanded its product line to video games and has lowered its shipping cost (Thompson 286). It also developed a third-party content delivery network so as to enable fast streaming of movies online. It also practiced online advertising on Yahoo, AOL, etc to attract subscribers (Thompson 287).

Threats – the company faces threats from Blockbusters. The contractual restrictions on its streaming content can retard its popularity.

 

Answer 4

Netflix had a strong competitive strength against that Blockbuster. Blockbuster was closing down its distribution centers in 2010 (Thompson  290) where as Netflix was expanding its business. The average movie rental fees were slower for Netflix than for Blockbuster. Netflix had the system of a fast delivery system that was absent in Blockbuster.

Netflix does enjoy a stronger sustainable advantage over blockbuster. This was shown by the revenue share of Netflix which increased from $500 million in 2004 to $2.1 billion in 2010 (Thompson 277) but blockbuster was reducing at a very fast rate and had a debt of $569 million on it (Thompson 277).

 

Answer 5

A few recommendations for Netflix CEO Reed Hastings:

  1. The company should market its products more diligently.
  2. They could offer separate rental plans so as to make their streaming services more comfortable.
  3. It should try to capture the people who do not watch movies online often
  4. It should increase its stock of movies for the streaming video library.

 

Answer 6

A few recommendations for Blockbuster CEO James Keyes:

  1. The company can shut down multiple stores in the same area to reduce the cost of overlapping.
  2. They should concentrate less on putting up stirs and focus more on putting revenues for rentals online.
  3. They can enter into business tie-ups with bigger giants like popular search engines and entertainment providers.
  4. They should focus more on their promotion strategies.
Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Netflix Case Study Example | Topics and Well Written Essays - 750 words”, n.d.)
Netflix Case Study Example | Topics and Well Written Essays - 750 words. Retrieved from https://studentshare.org/management/1605208-netflix
(Netflix Case Study Example | Topics and Well Written Essays - 750 Words)
Netflix Case Study Example | Topics and Well Written Essays - 750 Words. https://studentshare.org/management/1605208-netflix.
“Netflix Case Study Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/management/1605208-netflix.
  • Cited: 0 times

CHECK THESE SAMPLES OF Netflixs Business Model and Strategy

Netflix 's Business Model and Strategy in Renting Movies and TV Episodes

Netflix's business model and strategy in Renting Movies and TV Episodes - Arthur A.... Thompson Case 6 Introduction By the end of the year 2010, Netflix's financial strategy was continuously yielding positive results.... This paper will therefore analyse Netflix case by focusing on the problems that resulted in the decline of Netflix business.... Analysis Lack of a supportive business environment is the main factor that led to the decline of Netflix....
4 Pages (1000 words) Case Study

What Is Netflixs Strategy

The paper "What Is Netflixs strategy" states that finding a new business strategy that is outside of all current models would be the best choice, but at least providing new releases at the time of release, or even sooner would provide the competitive edge the company currently needs.... The strategy that Netflix uses is to provide a monthly subscription through which the subscriber has access to unlimited streaming video that includes movies and television, along with other video content....
6 Pages (1500 words) Admission/Application Essay

Netflixs Business Model and Strategy in Renting Movies

The paper "Netflix's business model and strategy in Renting Movies" discusses that the company should emphasize escalating the figure of its subscribers so that it could be able to move ahead of its rising operating costs.... Owing to low entry cost, more and more competitors can enter into this kind of business....
7 Pages (1750 words) Assignment

NetFlix as a Well Established Brand

In this paper, we will analyze NetFlix's market standing, its business model and its business and marketing strategy using various tools like the SWOT analysis and Porter's five forces to determine the company's key success factors and staying strength.... Moving forwards, the discussion continues to determine the critical areas that might need immediate attention for NetFlix's sustenance and also suggest some marketing and strategy recommendations that might prove useful in revenue and subscription improvement....
8 Pages (2000 words) Case Study

Netflix & Qwiksters Market Strategy

How Netflix chose to convey the business model change and what went wrong with the communication plan Netflix chose to communicate the business model through a formal decision by its executives.... Deliberation among the executives, as occurred in deciding on the split, was therefore the strategy to deciding on the strategy for communicating the change model (Bevin122, 2011).... Reaction to Netflix's strategy to handling the public outcry, success in alleviating the perceived problem, and the organization's image following the attempt to alleviate the perceived problem I believe that Netflix's decision to rescind its initial plans for separating its...
4 Pages (1000 words) Essay

Business Models of Netflix and Starbucks

ut since Starbuck's core business model is dependent on retail outlets and property ownership then it would be prudent to extend its brands through expansion in the brick-and-mortar environment.... The paper "Business Models of Netflix and Starbucks" will begin with the statement that Starbucks' strategy is to provide its customers with the highest standard coffee in a good company and environment with the Starbucks stores as the middle ground between work and home....
4 Pages (1000 words) Essay

Executive Brief for Netflix

Nonetheless, Netflix has a huge opportunity to replicate its business model and enter overseas markets for greater effectiveness.... "Executive Brief for Netflix" paper focuses on the potential opportunities that Netflix might have in its business, through a value creation strategy.... Opportunities as well as challenges that Netflix might face while creating business values will also be correlated in this study....
4 Pages (1000 words) Case Study

Internal Analysis for Netflix Inc

With reference to value, the VRIO analysis examines whether the resources owned by an organization allow it to exploit opportunities and neutralize threats that are present in the organization's business environment (Enders et al.... This coursework "Internal Analysis for Netflix Inc" focuses on a California-based internet entertainment company that offers subscription video-on-demand (SVoD) services....
8 Pages (2000 words) Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us