Netflix Case Analysis

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NETFLIX
By Roxanne Meyer

Netflix is an American provider and the world’s leading internet subscription service of on-demand streaming media in the United States, Canada, Latin America, the Caribbean, United Kingdom and Ireland and flat rate DVD-by-mail in the United States. Netflix members can instantly watch unlimited films and TV episodes streamed over the internet to more than 700 devices for about $7.99 a month. With regards to increasing the influence of the Netflix brand, expansion into the video game industry could be an option, however various factors such as competitors, viability and sustainability of the company as a whole need to be further analyzed in order to assess whether this proposal is feasible.

Competitor Analysis

AREA| NETFLIX| HULU| BlOCKBUSTER| REDBOX|
market share| 55%| 35%| 5%| 5%|
Subscribers| 23.6 mil| 24 mil| low| 12 mil|
Brand Popularity| HIGH| LOW| MED-HIGH| MEDIUM|
start date| 1998| 2007| 1985| 2003|
Revenue in 2011| 705.7 mil| 420 mil| bankrupt| 363.9 mil| Revenue increase from 2010| 29.00%| 48%|  |  |
Growth in customers| 30%| 50%|  | 30%|
(in 2011)|  |  |  |  |

Netflix's success has inspired a number of other DVD rental companies both in the United States and abroad, but none of the purely online companies appear to approach Netflix in terms of market share or revenues as can be seen above. Hulu is a close second in terms of Market share and it can be seen that its entry into the market was nearly a decade later than that of Netflix , which places netflix in the advantageous position of the more experienced firm. The cheapest subscription fee of Netflix, Hulu and Blockbuster (online) is all around $7.99 which is an extremely competitive price and thus forces the public to choose between these online movie services based on brand, quality and popularity. With Regards to popularity in terms of Brand, netflix seems to be the leader but one has to consider company growth and according to the figures in the table above it seems as if HULU is growing with considerable speed.

However, Netflix holds top leadership in regards to their total market share of the on-line movie rental industry. As well as being the first on the market, Netflix holds a contract with movie studios and film producers (such as MGM studios, Warner Bros., Dream Works, etc.) to gain direct distribution and access to first run movie content without the traditional 9 to 12 month delay. This strategy of developing key alliances (Best Buy) with content providers in film and the television sector, and merchandise of DVD hardware has moved Netflix straight to the top of the market, making their brand name recognized and trusted. Brand loyalty is one of the most important factors in this industry where the prices of substitutes are similar and competitive.

Netflix SWOT analysis
Strengths
* User experience
Delivering DVDs straight to the home is a major convenience that pretty much has led to the demise of the bricks-and-mortar business of Blockbuster (NYSE: BBI  ) . With just a little bit of timing, customers can have movies coming and going so as to almost always have a movie ready to watch. Add the recommendation engine for additional suggestions along with streaming and strong customer support, and you've got a pretty good experience generating loyal and enthusiastic customers * Market Share leader

Netflix holds top leadership in regards to their total market share of the on-line movie rental industry. * Streaming capability.
A benefit of having any monthly plan costing at least $7.99, are for those nights when the random urge takes you. Plus, Netflix streaming is available on many different consumer electronic devices and is becoming a standard feature for new TVs. * Key Alliances

Netflix holds a contract with movie studios and film producers (such as MGM studios, Warner Bros., Dream Works, etc.) to gain direct distribution and...
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