Netflix Case Study

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Running Head: NETFLIX ON THE MOVE

CHANGES IN THE MOVIE RENTAL BUSINESS

Contents

Introduction……………………………………………………………………………. 3

Changes Within The Movie Rental Business……………………………………… 4

NetFlix History and Strategies…..…………………………………………………... 6

Analyzing NetFlix Results…..…………………………..…………………………… 9

Review and Recommendations………………………………………..…………… 10

Conclusion……………………………………………………………………………. 12

References……………………………………………………………………………. 13

Introduction

Impressive is the company that is able to make it to the top of their industry in quick fashion and remain there atop of all the rest of the industries. Taking away market share from other established companies is a feat that does not occur by accident. NetFlix is a company that was born in 1997 and by 2007 had revenues exceeding $1 billion. Not all competitors were prepared to handle the new strategies being employed by NetFlix and some fell quickly. Strategies and changes within the movie rental business that allowed NetFlix to accomplish such a quick business success story and others to fall just as quickly will be explored to give a clear picture of some of the external factors that were relevant in the NetFlix movement. By reviewing and analyzing some of the business decisions by NetFlix over the past 10 years, it will provide a better understanding of the effects of these decisions. Although NetFlix has obtained some great results over these years, there are also lessons to be learned and recommendations that can be given so that some of the less beneficial business decisions will not be repeated. This exploration of the NetFlix business strategy and the results from executing their strategies will help gain insight on how important it is to stay involved with the customer and satisfy the needs of the market.

Changes Within the Movie Rental Business

The video rental industry has reinvented itself often and in impressive fashion. Providing entertainment in the most convenient and cost-effective fashion has become the motivator for multiple changes within the industry. The video industry began to take off in the 1980’s with larger chains like Blockbuster and Movie Gallery rising over the previous smaller shops. These new avenues are providing videos granted a better selection and often better pricing for the common video consumer. The popularity of these chains became more popular around the world and the businesses kept adding buildings and locations and became very popular for their wide selections, reasonable prices, and membership perks. Before long, these businesses added the increasingly growing gaming rentals as well making it convenient to now rent games for a much lower cost than purchasing the games. Convenience was impacted once again as NetFlix came on the scene in the late 1990’s. No other businesses had made efforts to use the unorthodox method of mailing DVDs to their customers. Rather than jumping in the car and heading to the nearest video store, NetFlix capitalized on bringing the videos to the customer using their mailbox. Not only was it convenient, NetFlix allowed customers to hang on to the DVD without incurring late fees until the customer was ready to return and pick a new movie to be shipped out. Rather than a charge for each movie as the traditional method was for all other players, NetFlix charged in a monthly fee structure that allowed movie watchers to continue to watch videos as quickly as they could watch and send back with a request for a new movie. Although NetFlix was at first looked at as a non-threat with their entrance into the market, it was not long before others began make efforts to copy the methods that NetFlix had brought to life. “Further fueled by convenience, hassle-free Redbox kiosks offering $1 new...
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