Netflix versus Blockbuster - Case Study Example

Netflix versus Blockbuster Central issue In 1999 Netflix came up with a program wherein s could rent DVDs by mail for a flat monthly fee. The customers can choose movies via the website, choose one to eight discs at a time, and through a prepaid envelope, return such DVDs after they finished their viewing. Through the fixed monthly rates, charges for late fees are no longer a major bother for the rental company. Netflix was able to expand its market and draw in a huge number of customers with its online options and consumer-friendly features. Netflix, as a result was able to get ahead of other rental companies. The central consideration in the above case is based on how Netflix will be able to maintain its current position as the premiere rental company in the US. Significant factor list: 1. Decrease of DVD sales were seen alongside the increase in online DVD rentals, computer downloads, and video sharing. High-definition (HD) television programs also increased in popularity and usage. 2. Prices for wide-screen TVs and HD TVs and DVDs also decreased with most of these TVs being able to maintain picture quality at low prices. 3. All TV stations were required by law (starting in 2009) to broadcast digitally, leading to an increase in HD programming. 4. Old and new TV series have been packaged into DVD formats, further cutting into DVD movie sales. 5. VOD formats were offered by cable companies like COMCAST. COMCAST customers were found to purchase less of movies because of the preferred format available to them. 6. More movie titles became available in most cable companies. 7. DVRs have reduced the necessity of movie rentals and purchases. 8. Online rentals have reduced movie and DVD sales. The above list is in order of priority. In assessing the list however, a common theme in these developments or factors is the introduction of online technology and the improvement of the quality of television. These developments have given consumers better access to quality TV shows and movies in the convenience of their homes. The need to purchase these DVDs has decreased because of such factors. It has also caused businesses in the entertainment, video rental, and video sales industry to discard their old practices in sales and rentals and to embrace the available technologies. Moreover, it has caused the rental and video sales industry to be more competitive with each other and with the cable companies. For those who were unable to compete, they lost significant sales and customers. Recommended Course of Actions: Recommendation 1 Netflix needs to maintain its position as the top rental company by coming up with more innovative techniques in drawing in customers. It cannot allow too much time to pass before new strategies can be conceptualized. Recommendation 2: Netflix needs to continually update its digital and its consumer-friendly options through online applications and options, and convenience-based options for consumers. Recommendation 3: Netflix needs to stay active in fighting and guarding “piracy” practices and illegal downloading. Recommendation 4: Netflix has to come up with new products or marketing strategies in order to maintain its edge on Blockbuster. Recommendation 5: Movie companies need to increase their product base: movie titles, TV series rentals, and video game rentals. Justification for recommendation 1: Netflix needs to maintain its competitive edge against other rental companies. It can maintain this edge by continually coming up with ways in which to market its products and making its options more consumer-friendly. This would help prevent consumers from leaving the company and would help draw in new customers. Justification for recommendation 2: Netflix still needs to come up with better ways to use digital and online technology to the advantage of consumers. Online technology can be used in order to make the rental process easier for the customers; the social networks can also be tapped in order to assist in the process of advertising and marketing the products available. Justification for recommendation 3: Two of the major issues in the entertainment industry right now are pirated movies and illegal downloads. These two issues are cutting into a major part of sales and profits for the entertainment industry, and also for video rental companies. In order to take control of this issue, a more united and solid stand against piracy and illegal downloading has to be implemented. In this regard, Netflix has to participate and cooperated with other companies in the implementation of policies against these illegal trends. Justification for Recommendation 4: There is a need for Netflix to come up with another major product. For many businesses and corporations in the current online world, all that was needed was for these companies to come up with that next major innovation and they suddenly reached the top of the industry. As exemplified by breakout companies and firms like Facebook, Google, YouTube, and TiVo, they all started with one major innovation which was massively embraced by the people. Through such innovations, they have now established their firm place in the online and digitized world. Coming up with online options for renting movies is already a thing of the past; it is time for Netflix to come up with another “big thing.” In order to do this, it needs to employ a team of innovative designers and experts who can come up with different ideas in order to improve the company’s marketing strategy or product base. Justification for Recommendation 5: Netflix has to make major strides towards increasing their products: movie titles, TV series, and video game rentals. In so doing it can ensure that these products become available to customers the soonest time possible after movie release in order to reduce movie piracy and illegal downloads. When more movie titles and other products become available, more customers can be drawn in. Consumers can also be prevented from availing of bootleg or pirated copies of movies because they know that they can get quality copies at the soonest time possible. Customers can also be encouraged to visit company stores or websites and rent available titles. Read More