Netflix Essay

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The business model for Blockbuster and the one for Netflix have many variations. Blockbuster was solely a “brick-and-mortar” company having no online affiliations. It made its money mostly from continuously providing customers with new movie releases to rent. Building thousands of Blockbusters countrywide also helped lead to the company’s success, for by doing so, customers were provided with the convenience of location. Both Blockbusters late fee system, which guaranteed the timely return of rented movies, and its policy of selling the already viewed films, contributed to the company’s value. Netflix, although also based solely on renting movies, was purely online unlike Blockbuster. Its business model revolved around three main criteria to attract a variety of customers, value, convenience, and selection. The company’s hope was to appeal to the customers who shop online for these three very same reasons. The company focused primarily on DVDs as it was a new technology at the time. Its business model also evolved from a fixed number of rentals per month to an unlimited number of rentals for a fixed prepaid price. They also had a recommendation service that attracted attention from many potential customers since it was not exclusive to Netflix customers. This system allowed Netflix to give customers a more personalized experience. Since it recommended mostly older films it allowed Netflix to utilize the movies that otherwise would never have been rented (Shih, Willy, et al). Both business models focused greatly on convenience. Netflix, however, provides a service that allows a renter to borrow a movie without ever having to leave his or her driveway. Also, its improvement in its business model that allows customers to rent an unlimited amount of DVDs per month is a worthwhile business strategy. Instead of being stubborn like Blockbuster, Netflix has evolved its business model to better fit the customer. Its ability to make the renting experience more personal...
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