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

Price-Hike-Train-Wreck - Netflix - Assignment Example

Cite this document
Summary
The outcome of the decision taken by Reed Hastings, to separate the price of DVD rentals from online streaming, had unprecedented consequences on the fate of the company. The immediate outcome was a huge reduction in the number of customers, which greatly weakened the…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.7% of users find it useful
Price-Hike-Train-Wreck - Netflix
Read Text Preview

Extract of sample "Price-Hike-Train-Wreck - Netflix"

Price-Hike-Train-Wreck - Netflix of the of the Contents Contents 2 Outcome 3 Alternative Measures 3 What was done right 4 Leader Attributes 4 Observations and Recommendations 5 References 6 Outcome The outcome of the decision taken by Reed Hastings, to separate the price of DVD rentals from online streaming, had unprecedented consequences on the fate of the company. The immediate outcome was a huge reduction in the number of customers, which greatly weakened the company’s position. The company recorded sharp reduction in the price of its stocks and reputation of the management was spoiled.

The main problem was that customers became angry with the decision of Netflix to do away with its DVD operations and the price hike accompanying it. The loss of customers from Netflix provided a huge opportunity to its competitors and the company began running losses, which was worse than expected (Sandoval, 2012). Alternative Measures The basic problem, which had led to the meltdown of Netflix, was the pace at which it had been advancing to change its business model. The problem was twofold.

If the company had chosen to act too slowly, then it could have lost out on its business to its competitors, who propagated online streaming; and if it continued to advance very fast, then it could have alienated its customers. The pace of the operation and the haphazard way in which it was conducted, led to the major fall. Following are the ways in which the company could have saved its position. Firstly, the company should have played the ball strategically and instead of delivering the bad news of 60% price hike, it should have first released the news about signing of streaming deals with eight new studios, including Paramount, Sony and Miramax and more than 3,500 TV episodes from 15 different network and cable stations, to gain the trust of customers (Adams, 2011).

Secondly, the company should have clearly informed subscribers about the benefits of online video streaming and provide proper and specific reasons for the rise in price. Thirdly, the company could have started its video streaming business, as a subsidiary to its main DVD business, under the same brand and once this genre had gained popularity, it could have phased out the DVD business. What was done right The idea that the company was trying to propagate was not incorrect. The popularity of DVD rentals is fast diminishing and demand for online streaming is increasing, despite the fact that quality of the latter is inferior to that of the former.

This is because online streaming has no shipping costs and revenues that can be earned from this business is higher than that earned from the business of DVD rentals. The closure of the large DVD rental chains signals the fact that betting on this business will no longer be profitable (Mendelson, 2013). In this regard, the vision of the company was ahead of its times and perhaps to some extent reasonable, but the pace of implementation of the whole process was incorrect. Leader Attributes The leader of Netflix, Reed Hastings, was considered to be a visionary and was voted by Fortune magazine as businessperson of the year.

The rationale behind restructuring the business model was that demand for DVDs would fall in the coming years. Hastings had anticipated that the DVD business will no longer be popular in coming years and the future of the industry will be online video streaming. This time his decision went wrong and the visionary was blamed for misleading and enraging the customers. However, when the business had started, it was Hastings who was responsible for the meteoric rise of Netflix, a company which delivered DVDs to the doorsteps of customers, established on a simple web-based platform.

Even so, in this particular decision, the leader did not consult with the other executives and the hasty decision taken by him resulted in an unfortunate outcome (Sandoval, 2012). Observations and Recommendations This case study reveals that a decision, which was supposed to affect a business in a positive way, had ended up impacting it negatively. This is a perfect example of a case, where the idea of a visionary goes horribly wrong. The haphazard implementation of a reasonable idea led to the system spiralling out of order.

According to the market conditions, the business of DVD renting will phase out eventually and will be taken over by online streaming. The action regarding this should have been taken by Hasting in a sequential manner. His haste ensued meltdown of the company. The recommendations for the company are: To restart the discount to win back customers. To provide both rental DVD and online streaming for gaining customer confidence. Start a campaign to spread benefits of online streaming over renting.

References Adams, S. (2011). Netflix Did The Right Thing. Retrieved from http://www.forbes.com/sites/susanadams/2011/10/11/netflix-did-the-right-thing/ Mendelson, S. (2013). Why I Mourn Blockbuster Video. Retrieved from http://www.forbes.com/sites/scottmendelson/2013/11/06/why-i-mourn-blockbuster-video/ Sandoval, G. (2012). Netflixs lost year: The inside story of the price-hike train wreck. Retrieved from http://news.cnet.com/8301-1023_3-57468798-93/netflixs-lost-year-the-inside-story-of-the-price-hike-train-wreck/%20

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Price-Hike-Train-Wreck - Netflix Assignment Example | Topics and Well Written Essays - 750 words”, n.d.)
Price-Hike-Train-Wreck - Netflix Assignment Example | Topics and Well Written Essays - 750 words. Retrieved from https://studentshare.org/marketing/1627520-price-hike-train-wreck-netflix
(Price-Hike-Train-Wreck - Netflix Assignment Example | Topics and Well Written Essays - 750 Words)
Price-Hike-Train-Wreck - Netflix Assignment Example | Topics and Well Written Essays - 750 Words. https://studentshare.org/marketing/1627520-price-hike-train-wreck-netflix.
“Price-Hike-Train-Wreck - Netflix Assignment Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/marketing/1627520-price-hike-train-wreck-netflix.
  • Cited: 0 times

CHECK THESE SAMPLES OF Price-Hike-Train-Wreck - Netflix

Supply Chain in Netflix

Name: Date: Supply Chain in netflix Company and Industry netflix Company is a provider of the Internet streaming media in United States, United Kingdom and Canada among other countries.... The headquarters of netflix is situated in Los Gatos, California.... At the end of 1999, netflix introduced a monthly subscription concept.... netflix has played a vital role in enhancement of independent film distribution....
10 Pages (2500 words) Essay

Competitive Strategy for Netflix and Direct TV

Running head: netflix & Direct TV Case Study Insert Name Insert Grade Course Insert 11 November 2011 netflix Case Study The Generic competitive strategy for netflix netflix is the leading internet subscription company with over 20 million subscribers who enjoy unlimited television shows and movies via internet connection to their computers.... hellip; In addition, netflix has continued to enjoy an increase in the number of subscribers, which has contributed to its success....
5 Pages (1250 words) Research Paper

Financial Analysis of Netflix

netflix Headquartered in California, netflix is currently the world's leading provider of movies and television on the internet.... Founded in 1997, netflix today has over 30 million subscribers in over 10 countries (netflix, 2012).... hellip; The subscription based digital service was started in 1999 and netflix now offers a collection of over 10,000 DVDs to its subscribers.... (netflix, 2012)netflix initially offered the traditional rent per DVD model which wasn't very successful especially because of the $2 late fees clause....
5 Pages (1250 words) Essay

Charismatic and visionary leadership: Reel Hastings

This paper looks to verify effective leadership by reference to Reed Hastings, the CEO and founder of netflix Company.... … Reed Hastings is the founder and CEO of netflix company.... Article 1: Why Reed Hastings should be applauded for netflix Split In this article, Mark Suster (2011) brings to picture the real idea of entrepreneurial characteristics that were openly noticed in this entrepreneur.... netflix divided its business into two groups as an expansionary strategy....
12 Pages (3000 words) Research Paper

Macro Economics-- Redbox Price Hike Could Dodge Netflix Outrage

This gives Redbox no choice but to raise its revenues to maintain Macroeconomics – Redbox Price Hike Could Dodge netflix Outrage Redbox has decided to increase the price of its daily rentals by 20% in response to netflix increasing its prices by 60%.... This is because a competitor, netflix, raised its prices by even more—60%....
1 Pages (250 words) Essay

The Netflix Financial Statement

This essay analyzes the netflix financial statement in 2012.... netflix needs to develop some new business strategies in order to survive in this rapidly changing movie industry.... hellip; There is no doubt about the fact that the business model of netflix has made the company a market leader in the DVD rental market.... netflix needs to develop some new business strategies in order to survive in this rapidly changing movie industry....
4 Pages (1000 words) Essay

Business Foundation Management

The analysis will examine the driving forces that were behind the decision that netflix Inc.... The company deals with home video entertainment whereby it includes video… In 2011, netflix Inc.... While initially, the investors and stakeholders seemed to love the decision of changing the consumer pricing structure, consumers had the debatable right of being Business Foundation Management The organisation that will be discussed in relation to its organisational decision is the netflix Inc....
2 Pages (500 words) Assignment

Is The Internet Destroying TV as We Know It

This assignment describes the Internet destroying TV.... It analyses arguments and counterarguments of this statement, advantages, and disadvantages of the Internet, and destroyed television industry.... hellip; Television is a device on which we see the videos that are transmitted in the form of signals through television stations....
10 Pages (2500 words) Assignment
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