Supply Chain in Netflix - Essay Example

Here, the idea came of starting a similar business and bring more diversity and customer friendly policies (New Word City, 2010). The organization’s website was launched in April 1998. The new online version came with a more traditional pay-per-rental model. Customers were charged $4 dollars as rental fee and $2 as postage fee. At the end of 1999, Netflix introduced a monthly subscription concept. The single rental model was dropped in early 2000. Since then, the company has established a reputation on the flat-fee unlimited rentals business model.

The model does not have late fees, due dates, per title rental fees or handling fees. The company maintained its extensive, personalized video recommendation system based on reviews and ratings by its customers. Netflix has played a vital role in enhancement of independent film distribution. The organization announced its billionth delivery at the beginning of 2007. By 2009, Netflix was offering more than 100,000 collections on DVD. During this time, the company had more than 10 million subscribers.

In 2011, Netflix announced that it had reached more than 23 million subscribers in United States and 26 million all over the world. Revenues had gone in excess of $1.5 billion (Laseter and Elliot, 2012). The video entertainment industry is very competitive. Competition is increasing as new realizations are being established. Numerous companies are joining the industry based on the returns involved. The markets involved include hotels, airlines and theater video entertainment. The market is segmented into several strategic groups.

This include sales, brick and mortar rentals, online rentals, DVD vending kiosks, video on demand services and mail-delivery services. Technological advancement is bringing various changes in the industry. The rental portion available from physical rentals is transforming to digital rentals (Sehgal, 2011). This is being provided via streaming channels that are connected through game consoles, set-top boxes and computers. All these applications work to bring the steaming aspect on consumers’ televisions.

As a result, viewing is made easier, interactive and enhances availability at all times. Consumers have been divided into two segments. These include convenience consumers and needy consumers. Convenience consumers are young, watch videos when they can and use technology to access various titles. One the other hand, needy consumers are older and less prone to using new technologies. Needy consumers are subject to watching specific programming. Traditional home video entertainment is reaching stasis.

For this reason, companies involved in the industry should concentrate on the streaming aspect. This will help in immersing substantial profits, in this competitive industry (Minis, 2011). Netflix is facing stiff competition from other players in the industry. New entrants are coming with new ideologies that are taking the industry with a storm. They are building on the loopholes that exist in at Netflix. The company needs to review its business models so as to operate profitably for as long as possible.

Supply Chain Description Netflix has a varied supply chain. This is based on the nature of operations being conducted. Various ways have been diversified to help reach the consumers. Among the supply chain used by the company, is the internet and postal system. The company has instituted online DVD rentals. Members only need to chose their desired collections