Netflix Case Study

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MGT 400

Case 11- Netflix Netflix’s entrance in to the movie rental industry during the early nineties gave them a perfect position to capture the market. At the time of Netflix’s founding many customers of normal video renting stores where becoming frustrated with the lack of service and late fees these video rental stores where providing. Netflix’s original strategy of targeting the early technology users helped them gain a lead when the use of DVD players became the majority of what customers where buying. As the company matured, they developed the business strategy of appealing to online customers. This strategy paid off for the company boosting them from a beginning customer base of 107 in 1999 to 1,487 customers in 2001. From the beginning Netflix has faced challenges and had to stand back and reconsider the business methods and strategies they were using. In this fast growing industry of online movie rental to remain on top Netflix has to be ahead of its competitors in innovation and customer satisfaction. Netflix from the beginning was described as “the company as the online destination for movie enthusiasts”. This was mainly due to the commitment to have not only new releases but to support smaller films that were not in the “top ten”. The top manager of content acquisition even stated that he and Hastings, the founder, had agreed upon “ the promise of a business model that promoted lesser known movies”. Netflix over the years developed different methods to promote these movies. A huge asset to Netflix is its customer personalization system that consists of a survey when you first subscribe to Netflix. This helps with inventory management through suggesting movies that are not new releases and are definitely in stock. The most recent challenge Netflix has been faced with is the entrance into the Video On Demand (VOD) market. The two main issues in the early development...
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