Netflix Strategy
Netflix: Strategic Analysis
Strategy I – Winter 2012
Basic Information & Assessment of Strategy
Netflix is a U.S provider of on-demand Internet streaming media.
Launched in1997, it originally offered DVD rental on a pay-per-use basis. In 1999, the company moved to a subscriptionbased model. In January 2008, Netflix began offering unlimited steaming content. Initial approach aimed to position the company as a low-cost video rental service competing with the brick and mortar stores and movie theaters. Since the product they were offering was not easy to differentiate, Netflix began focusing more on the services provided with the DVD rental rather than the price alone. Netflix introduced a No-Due-Dates-No-Late-Fees model and offered an excellent customer service. It provided a quality customer experience with their user-friendly website, recommendation software, queue function, vast content library and free overnight straight-to-home delivery.
A differentiated strategy has enabled Netflix to provide distinct value to their customers.
Netflix’s first mover advantage allowed them to garner a large subscriber base and helped them transform the video rental business model.
Netflix in entering into multi-year licenses with studios and distributors to continually provide newer content, attracting more subscribers and allowing for organic growth.
Due to the technological advances as well as changing trends in movie viewing and consumer preferences, Netflix’s focus has shifted towards wireless video-on-demand services.
The rise of complementary products, such as smart mobile devices and TV’s as well as the proliferation of broadband internet access allowed a fundamental shift in content distribution.
Overall, Netflix’s strategy is to retain and attract new subscribers by continually providing a larger selection of content and incorporating new technology to enhance the user experience.
The company started its expansion into international markets to
Strategy I – Winter 2012
Basic Information & Assessment of Strategy
Netflix is a U.S provider of on-demand Internet streaming media.
Launched in1997, it originally offered DVD rental on a pay-per-use basis. In 1999, the company moved to a subscriptionbased model. In January 2008, Netflix began offering unlimited steaming content. Initial approach aimed to position the company as a low-cost video rental service competing with the brick and mortar stores and movie theaters. Since the product they were offering was not easy to differentiate, Netflix began focusing more on the services provided with the DVD rental rather than the price alone. Netflix introduced a No-Due-Dates-No-Late-Fees model and offered an excellent customer service. It provided a quality customer experience with their user-friendly website, recommendation software, queue function, vast content library and free overnight straight-to-home delivery.
A differentiated strategy has enabled Netflix to provide distinct value to their customers.
Netflix’s first mover advantage allowed them to garner a large subscriber base and helped them transform the video rental business model.
Netflix in entering into multi-year licenses with studios and distributors to continually provide newer content, attracting more subscribers and allowing for organic growth.
Due to the technological advances as well as changing trends in movie viewing and consumer preferences, Netflix’s focus has shifted towards wireless video-on-demand services.
The rise of complementary products, such as smart mobile devices and TV’s as well as the proliferation of broadband internet access allowed a fundamental shift in content distribution.
Overall, Netflix’s strategy is to retain and attract new subscribers by continually providing a larger selection of content and incorporating new technology to enhance the user experience.
The company started its expansion into international markets to
References: Q3 2011 – Financial Data and Letter to Shareholders Netflix.com http://money.cnn.com/2011/09/01/technology/netflix_ starz/?iid=EL http://money.cnn.com/2011/09/19/technology/netflix_ cash/index.htm http://www.broadcastingcable.com/article/478980CES_Hulu_Plus_Subs_Hit_1_2_Million_in_2011.php 8 Netflix - Strategic Analysis