Netflix Case Study

Background
Netflix Inc. was established in 1997 in Los Gatos, California, by Reed Hastings. His initial goal was to build the world’s best Internet movie service and today Netflix has become the world’s largest online entertainment subscription service. The company offers its subscribers access to a library of movies, television, and other filmed entertainment titles on DVD. Members can get DVDs delivered to their homes or they can instantly watch movies and TV episodes streamed to their TVs and PCs. Today Netflix has approximately 15 million subscribers in the United States and Canada who pay a monthly fee ranging from $8.99 to $47.99.
Netflix’s business model revolutionized the movie rental business and it has continued to offer better services then the competition. They have done this by identifying strategic moves to out-compete the competition and determine how to stay ahead of other competitors that were are offering pay-per-view movies. Netflix has conquered the DVD rental business and has continued to expand its streaming capabilities through Microsoft’s Xbox 360, Nintendo’s Wii and Sony’s PS3 consoles; Blu-ray disc players from Best Buy’s Insignia brand, LG and Samsung; Internet TVs from LG, Samsung, Sony and VIZIO; the Roku digital video player and TiVo digital video recorders; and Apple’s iPhone, iPad and iPod touch. Management expects that at some point Internet delivery of media content will surpass postal delivery and that eventually postal delivery would account for a relatively small fraction of Netflix’s business.
Competition
Netflix’s competitive rivals at one point were the brick and mortar rental stores; their largest competitor was Blockbuster. However in the past several years the movie rental industry has changed rapidly and Blockbuster unfortunately did not change as the industry evolved. Once Blockbuster realized it needed to adapt to online demand it was simply was too late to join in the culture created by Netflix. This failure to... [continues]

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