Netflix Case Study
Netflix has used data and business analytics as a differentiator and competitive advantage in building its market position by using that data to build a more personalized experience for their customers. Besides the fact that their business model was innovative, giving them a first mover advantage, their use of data meant that the customer did not have to look for movies; the movies they would want to watch found them.
The customers themselves provide the initial data inputs; they tell Netflix what kind of movies they like and rate movies they have already seen. Then, Netflix uses their innovative algorithms to determine what other movies the customer would like to see. The interface was very user friendly and saved the customers a lot of angst and the annoyance of having to find the movies for themselves.
In addition to improving the customer-company experience, their use of data analytics helped them maximize their profits by having incredibly efficient business processes. The company was not constrained by storage space and was able to maximize their inventory by only needing to maintain their storage and distribution centers instead of having individual store locations. They use algorithms to predict which movies will be the most popular and how much stock they will need. This maximizes profits by preventing the storage centers from overstocking on movies that will be in lower demand.
Going into the future, Netflix needs to convert this same usage of data to a different form. As was alluded to in the article, the industry is moving into the living room, and Netflix needs to try to corner that market. The idea of the Roku and bringing Netflix into the living room is the right way to go, but cutting out having to buy an accessory would be key in continuing Netflix dominance in movie distribution.
The direction that television technology is going is for everything to be on your television set: TV,...