Netflix

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Netflix
Katie M. Gregersen
Benedictine University

Netflix, Inc. is a company that has been around since 1997. While it started with a system of mail-order DVDs, it has grown into a gigantic empire and has stood its ground against competitors like Blockbuster, Walmart and Amazon. While the corporate headquarters employs approximately 900 people, Netflix also has distribution centers all over the country. Netflix has come a long ways from where it started back in 1997. With more than 27 million customers in the United States, Canada, Latin America, the United Kingdom and Ireland (Netflix Company Facts, 2012), Netflix has proven that they are a force to be reckoned with. In this paper, we will examine some of the individual behaviors, the motivation, teamwork, communication and organizations changes that Netflix has experienced in its rise to greatness. When you think of DVD rentals, you generally think of a video store or perhaps an online vendor. Back when I was growing up, heading to Blockbuster on a Friday night was the epitome of everything that was cool. I got to browse through all the movies and pick which latest releases I wanted to watch. Blockbuster was only about 18 blocks away, so the drive was quick. Nowadays, our society has grown into one of instant convenience. People have grown lazy and getting in the car to drive to the nearest video rental store is too much. Or worse, if people drum up the energy to go and rent a movie, they seldom may have the energy to return the movie timely, thus incurring late fees. Enter Netflix.

One of the greatest draws of Netflix is the fact that they do not have any late fees. You are able to rent a DVD online and have it shipped to your house, often within one business day. You then can keep that movie for as long as you want without having to worry about late fees. What an amazing concept for those who are more on the lazy side of life! The Netflix case as presented in Griffin & Moorhead’s book “Organizational Behavior” is certainly fascinating. It provides us with the story of a company that started with a simple idea and has turned it into one of the most recognizable companies in the United States, and quite soon to be the world. Netflix started with the novel idea of “people do not like to pay late fees”. So why not have a company who would charge a standard going rate per month for movies that they could keep for as long as they wanted without having to be concerned with the notion of late fees? CEO Reed Hastings came up with this plan after suffering a pretty monstrous late fee of his own from Blockbuster. As the company began to take off, there were certainly items that were of mass appeal to the public. Mr. Hastings realized that his customer base was all about convenience: not having to get off the couch to rent a movie, not having to worry about late fees or due dates, and being able to set up your own “queue” were all things that customers thought added value to their lives. As Netflix began to grow and flourish, its effects were definitely felt on their competition. Blockbuster began feeling the effects and their business started to suffer severely. For fiscal 2008, Blockbuster’s revenues were $700 million less than they had been in 2003, while revenues at Netflix were more than $1 billion higher. A year later, Blockbuster reported losses of nearly $200 million for fiscal 2009…in other words, Netflix is worth more than 100 times what Blockbuster is worth (Griffin & Moorhead, 2012, 2010). Blockbuster did gain some ground in their fight against Netflix when it began offering Blockbuster Total Access, which “replaced its late-fee policy with a plan…involving grace periods, automatic purchase payments, and restocking fees” (Griffin & Moorhead, 2012, 2010). While that helped Blockbuster out in the short-term, Netflix still continued to gain ground in the movie-renting arena and as of 2010, the organization had more than 16...
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