The business model that Netflix employs is to offer an unlimited amount of monthly DVD rentals for a small monthly fee. Netflix uses UPS to ship the movies (up to three at a time) to customers. A key part of Netflix strategy is persuading customers into renting movies they had not previously heard of through a ‘You Might Also Like’ type feature. With different articles written daily on select movies, as well as offering suggestions based on past rentals. This allows them to obtain a continued stream of revenue on movies that might otherwise be overlooked at a brick and mortar store like Blockbuster.
--What external factors should Netflix consider as they look to the longer-term future? Which are opportunities? Which are threats?
Longer term factors that Netflix could should consider include the growing technological influence that cable wields. This means Video on Demand (or VOD) where customers can watch movies from their home at the click of a button. Netflix is excellently positioned to take advantage of this opportunity with a huge database of movies that could be put into the digital format. This provides another opportunity over the brick and mortar stores of the past. Not focusing on this area, or overlooking it, is a threat. Other threats include other entertainment providers offering movies/services similar to theirs in a more efficient or progressive manner, thus maintaining the need for Netflix to stay ahead of the curve as they did with their original business model.