Netflix Case Study and Survey Results

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Netflix Survey Results and AnalysisPURPOSEAs the future of DVD rental (online and in physical stores) becomes even more congested with the addition of online movie/tv download sites, Netflix is seeking to learn more about the current and future usage by customers. In January 2007 Netflix began a limited launch of an online download service which they have been keeping relatively quiet until additional research and information become available regarding the future of movie/tv show rentals. Note: CEO Reed Hastings has committed his company to hitting 20 million subscribers between 2010 and 2012 (BusinessWeek) so Netflix has no intentions of bowing out of the movie market. In addition, Netflix would like to gain insight into DVD rental consumer habits, opinions, insights and activities as well as the demographics of their best users and their more challenging markets.

Overview:Netflix currently boasts 6.8 million subscribers since launching its subscription service in 1999. Netflix operates 44 shipping centers located throughout the United States and more than 90% of Netflix subscribers live within one-day delivery postal zones. On average, Netflix ships 1.6 million DVDs each day (Netflix.com). In January of 2007, Netflix announced that it would introduce a trial download service for approximately 1,000 movies and TV shows. Netflix needs to determine if and when the online rental service will give way to online downloading.

General Findings:We designed a 19 item survey with three prescreening questions designed to eliminate people who do not rent DVDs, will not in the next 6 months probably rent a DVD, and who themselves or their families work at a DVD rental provider, company or service (Video On Demand, PPV, etc). We sent our survey out to a wide sample based on random email addresses. Surprisingly out of the 154 respondents to our survey, only 106 passed through the prescreening questions—eliminating nearly 32% of our audience. When I went offline and asked a couple of respondents who didn’t make it through the initial prescreen I was told that they either borrow DVDs, download or burn DVD’s illegally from friends or family who have rented or purchased them or pay to download them legally online. Respondents were unlikely to want to reveal more information on illegal downloading practices and declined further surveys.

After the prescreen questions, we asked respondents to tell us on a scale of 1-7 with 1 being “not at all interested” and 7 being “extremely interested” how interested they would be in renting a DVD online instead of in a store for a similar price which included return mail service. Out of the 106 total respondents, about 39% (41) responded “very interested”. The rest of the responses were erratically divided among the other options though 17% did indicate “somewhat interested”. Since this question is a likert scale or semantic differential question it is important to allow for differences in how consumers define “extremely interested” and “not at all interested”.

The next question involved customer satisfaction in DVD rental overall regardless of whether it was online or from a store or pay-per-view. While 36% were very satisfied, the majority, 47% was just “satisfied”. Perhaps the most important piece of information from this survey lies here: Less than half of the DVD rental consumers (who responded to our survey) were satisfied with their rental service regardless of where it comes from (store, online, etc). A major aspect of the DVD/movie/tv show rental market is apparently lacking by online, retail or the pay-per-view services in regards to customer satisfaction. This question should be expanded upon in future surveys to find out what exactly consumers are looking for that would increase their satisfaction. But as our survey continues, we are better able to gauge what other attributes are necessary to customer satisfaction.

Our following question was a basic dichotomous question and...
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