With the fast pace advancement in technology, Netflix can easily source for the
technology and infrastructure to provide VOD services to its customers. Moreover,
Netflix can review on the current competitors in the VOD market to have a safer measure
before entering into the market. Since Netflix already have an infrastructure for online
customers, and that is their point of contact with customers, they could be at an advantage
to change their business model to providing VOD online, or partner with Cable provider
to deliver the VOD to customer via customers' television set. With VOD, the problems
associated with inventory control such as damaged as lost DVDs might be eliminated.
More people have higher purchasing power since more are buying high-price durable
goods like big-screen HDTV. Hence, it created opportunity for Netflix to offer VOD to
this market segment.
Threats for Netflix
Video streaming technologies had evolved drastically over the years to the recent
VOD. Netflix knows, it is just a matter of time that VOD will become the public most
commonly way of viewing media, but the unknown is that when will that be. If they
continuingly be complacent with their existing model, they will lose out to the intense
competition in the industry. The risk is, for how long they can leverage on their existing
model, until they change their strategy before losing out market shares. Brick-and-mortar
stores like Blockbuster will continue to enjoy its business with customers who want to get
their DVDs on the spot and do not consume high volume of DVDs.