Netflix Case

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Shannon Young
Netflix Case
MGT 4800-10

Netflix is a cheap way of home entertainment, do not get me wrong, but they are not fulfilling customer needs. Due to the poor quality of DVD’s and older movie films, they are continuing to loose subscribers on a monthly basis. The online streaming content is very reliable and very convenient for customers. Throughout this paper, I am going to be discussing ways for improvement for Netflix.

Netflix is an online subscription-based DVD rental service, and it was first conceived by Hastings after he discovered an overdue rental copy of Apollo 13 in his closet. It was founded in 1997 during the emergent days of Internet retailing, when online competitors to traditional “brick-and-motor” retail stores were gaining prominence. Hasting and his team used the models of the most successful Internet retailers of the time to identify characteristics they thought might appeal to customers: value, convenience and selection. Why can’t Netflix offer new releases as soon as their competitors?

This issue is crucial because it motivates customers to rent newly released movies and watch the films at home with friends for a cheap amount from the competition the company has, such as, Redbox and local movie stores. Netflix can be ordered by mail and also through streaming online. If it is ordered by mail, the movies do not make it to your address right away; they may take up to 2-5 days. If customers wanted the movie or television series right away and didn’t have internet, they could easily go to their local video store to rent the movies and take them home with them. Netflix’s subscription plan offered unlimited monthly rentals, allowing customers to hold up to three movies at a time for a monthly fee of $17.99. This is a very low price for a month of movie subscriptions, but a disadvantage to this is that customers are only able to have three films at a time; so that means that they would have to wait for the movies that they have in their possession to be shipped back in order to receive new ones. Another disadvantage is that Netflix does not offer the new released movies right away. They offer the ability to order older movies and older television series. Customers could easily stop at a Rebox and order any amount of newly released movies for only $1.20 per movie. If the local Redbox is out of the movie that they are looking for, then the customers could go to their local movie store, such as a Family Video and order a film for $3.95 for 4 nights. I have conducted a SWOT analysis for Netflix. Some strengths of Netflix would be the low cost for a monthly subscription of any movie you would like. You can access it through online streaming for a cheaper price. You can get not only movies, but also your favorite television series. Netflix can be ordered and watched through gaming systems such as; Wii, PS3 and an Xbox. They have a very strong expansion and a huge customer scale. It is very easy to navigate through their website.

Some of the weaknesses of Netflix include the lack of streaming content because it could hurt companies that rely on the business model. The cost for lost or defective DVD’s is very high for customers. They do not offer the newest released movies for customers who cannot wait any longer to watch their newest favorite movie. The inability to create a viable succession plane in case the leadership dies. Netflix does not own the content it provides to its customers.

Some opportunities of Netflix include the strong international expansion of the company. Such as Canada launched and received almost 1 million subscribers. Netflix has a tiered pricing structure.

Some threats to Netflix include increasing the cost to license the content. The more competitors that they have, the more bids for content, which results in higher prices. There is a lot of competition out there in the movie film industry, such as; Block buster, Redbox, Amazon is...
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