Case Analysis Netflix
Netflix has been successful introducing a new business model for the DVD rent industry. The new model is base completely online, changing the way that price of the service has been settled before. The new business model is bases new pricing system in which customer neither pay late return fees, nor shipping fees.
This business model have been so successful that other big player such as Blockbuster, and Wal-Mart start to copy the business model, which is a real threat for Netflix due to the competitive nature of its new rivals.
2. COMPANY’S CURRENT STRATEGY
“To have a global entertainment distribution company that provides a unique channel for film producers and studios…. As Starbucks is for coffee, Netflix will be for movies.”
“To provide a premier, filmed-entertainment subscription service to a large and growing subscriber base.”
Netflix expect to generate $1 billion in revenue by 2006.
Netflix expects five percent of all U.S. households to become Netflix members by 2006, resulting in five million members.
2.4. Corporate level strategy
Low diversification: The online video retailer unit has more than 95% of revenue (see income Statement)
To gain competitive advantage through related liked strategy, Netflix announce a partnership with TiVo.
2.5. Business level strategies
Netflix target market is broad: people, who have access to internet, own at least one DVD player, and are willing to rent DVDs online initially in USA.
The advantage the company offer to customer is based on differentiation: wide selection of movies, fast delivery, neither late fees, nor shipping fees.
3. EVALUATION OF CURRENT STRATEGY PERFORMANCE
3.1. Competitive performance
The trend in sales and market share indicate that the company is growing according to its projections: in its first three year acquired 670,000 subscribers and 2.6 million subscribers at the