Netflix Marketing Plan

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Netflix, Inc. specializes in providing home video entertainment within the video entertainment industry via both DVD’s and instant streaming of video. The company effectively reinvented the video rental industry by using a customer-facing subscription model instead of the standard per-use rental with due dates and penalties. Netflix has faced turmoil in the past year since its decision to separate its streaming and DVD business requiring customers to pay a separate fee for each service practically doubling the previous rate. The resulting fallout from customers was the loss of more 800,000 subscribers in the third quarter of 2011 (Edwards, 2011). Competitors seeking to take advantage of the company’s weakened position have attempted to increase their share of the market through streaming and online video rentals. Though Netflix has started to regain some of its lost footing, the company has to find new market segments to enter while improving its customer relationships. Netflix should add video game disc rentals along streaming gaming and live online play options to its product line to compete in this growing industry. The company should also add a discounted bundle pricing strategy to encourage customers to use more services. These moves will increase subscribership and put the company in a position to dominate another home entertainment segment. The company may also be able to attract customers who left in protest to the new pricing policies and increase customer loyalty. Situational Analysis

The video game industry grows year over year and was double that of music growth in 2011 (Anderson, 2008). There are several internet- companies and kiosk services available where games are rented but only a few are considered strong competitors in the video game industry. Market Summary

Video game play is a home entertainment media that is popular in many households in the United States and globally. Video game revenues have experienced 5.7% growth from 2002-2006 while movies and music had negative growth of -0.3% and -11.6% respectively as shown in the chart below (Anderson, 2008).

[Move the period to follow the citation] (Anderson, 2008)

In 2004, American consumers spent $8.2 billion on entertainment software with console games making up 75.7%, PC games 12.8%, online games 7.9%, and wireless games accounting for 3.4% of those sales (Crandall & Sidak, n.d., p. 14). In the secondary market of rentals of video games, companies such as Blockbuster, Gamefly, and Hollywood Video posted revenues of $700 million in 2004 and the industry has been growing ever since (Crandall & Sidak, n.d., p. 17). In 2010 an estimated 72% of American households were reported to play video games with $25.1 billion spent on video games, consoles, and accessories to accompany the devices and $10.1 billion was spent on video game content alone ("EMA," 2012, para. 1). With the average age of the video gamer being 37 and has at least 10 years of playing under his or her belt, the average age of those purchasing the games being 41 and with over 29% of Americans age 50 or greater playing video games this is a market that crosses marketing targets for Netflix and further illustrates the revenue potential for the company ("ESA," 2012, expression 4, 5, & 7). SWOT Analysis

The SWOT Analysis for Netflix includes the current issues they face with the DVD and streaming services, because each can affect the contracts, licenses, and function of any gaming market entry. This analysis looks at the components as they relate to video game rentals, streaming, and online play of games as well as the introduction and implementation of a bundle pricing feature Strengths. Netflix has the advantage of strong branding through the current business model in the movie rental industry. The company was a first-mover in the rental industry with its subscription model that offers no due dates and has no penalty fees. The convenience offered by the current model...
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