Netflix Case Solution

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Anthony
 Morand
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 

 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 

Master
 in
 Business
 Management
 

1
 –
 How
 is
 the
 online
 movie
 rental
 business
 changing?
 Map
 the
 industry’s
 value
 chain
 from
  end
 to
 end.
 

  Since
  the
  creation
  of
  Netflix
  in
  1997,
  the
  online
  movie
  rental
  business
  has
  been
  changing
 constantly
 forcing
 companies
 to
 adapt
 their
 strategy.
 At
 the
 earliest
 activity
  of
  Netflix,
  Blockbuster
  dominated
  the
  market
  and
  customers
  were
  renting
  VHS
  movies
 and
 DVDs
 directly
 from
 retail
 locations,
 around
 70%
 of
 the
 rental
 concerned
  new
  releases.
  Then
  Netflix
  popularized
  the
  online
  movie
  rental
  by
  offering
  its
  customers
 the
 possibility
 to
 rent
 a
 movie
 directly
 from
 its
 website
 to
 finally
 have
 the
  DVD
 mailed
 to
 them.
 Afterward,
 Netflix
 has
 to
 face
 a
 growing
 competitor
 network,
  not
 only
 from
 classical
 retail
 locations
 but
 also
 on
 Internet.
 Customers
 became
 more
  and
  more
  demanding
  about
  the
  delay
  of
  deliveries,
  the
  availability
  and
  choice
  of
  the
  movies
 and
 the
 flexibility
 concerning
 the
 fees
 for
 late
 returns.
 Customers
 started
 to
  subscribe
 to
 prepaid
 plans
 enabling
 them
 to
 rent
 a
 number
 of
 DVDs
 relative
 to
 their
  plan
 or
 package.
 The
 next
 big
 step
 came
 with
 the
 development
 of
 video-­‐on-­‐demand
  a
  mix
  between
  pay-­‐per-­‐view
  programing
  and
  Internet
  downloading
  and
  the
  apparition
  of
  HD
  movies.
  Customer
  could
  now
  directly
  watch
  their
  movie
  on
  specific
  TV
  channels
  or
  on
  Internet;
  they
  were
  also
  able
  to
  download
  them.
  The
  process
  was
  and
  is
  still
  complicated
  and
  even
  if
  VOD
  is
  the
  future
  of
  online
  movie
  rental
  the
  adoption
  is
  slow.
  For
  VOD
  to
  become
  a
  mass
  product
  market
  it
  need
  to
  become
  easier
 without
 having
 some
 kind
 of
 transition
 system
 between
 a
 PC
 and
 a
 computer
  but
  it
  also
  need
  to
  have
  a
  large
  choice
  of
  movies
  which
  is
  filtrated
  by
  licencing
  obligations.
 
  Most
  of
  the
  company
  use
  a
  similar
  value
  chain
  model.
  After
  the
  inbound
  logistic
  process
  in
  which
  companies
  buy
  the
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