Running Head: Netflix Case Analysis
Netflix Case Analysis
University of Kentucky
Often times the spark for vision can come from unexpected places. Take Walt Disney for example, the creator of the first animated feature-length motion picture. He was one of the greatest dreamers of the twentieth century. And his inspiration came from his disappointment when he took his two daughters to an amusement park in Los Angeles. Fascinated by the beauty of the carousels at the park he edged closer, only to find he had been fooled. The horses had a shabby paint job when viewed up close, and only the outside horses moved. Consequently, his disappointment became his inspiration for his grand vision, and the rest is history. Similarly, when Reed Hastings was forced to pay a $40 late fee for an overdue in-store copy of Apollo 13 he was not pleased. As a result of that unpleasant experience, he came up with the idea for a rent-by-mail video business. His disappointment sparked his vision, and thus Netflix was born. In 1997 Reed Hastings and Marc Randolph co-founded Netflix in an effort to offer online movie rentals. Based off this clever, yet seemingly simple idea, these two men laid the foundation for the blueprint that would transform Netflix into the world’s leading streaming subscription service for movies and television. For a low monthly rate of $7.99 Netflix users are granted the opportunity to watch movies and regularly scheduled programs, anytime or place, with an internet connection. Currently, ‘With more than 37 million streaming members in the United States, Canada, Latin America, the United Kingdom, Ireland and the Nordics, Netflix has revolutionized the way people enjoy entertainment.’ However, the reason behind why each user is willing to pay is different, which only further displays the potential for growth Netflix has. According to the case, ‘Netflix was able to grow its subscriber base by 35 percent in the course of one year (2009-2010) to nearly 14 million subscribers. Within the same period, revenue grew by 25 percent $493.7 million and net income by 44 percent to $32.3 million’. This statement alone conveys the challenges Netflix will face with continuing to transform their online streaming product to a enterprise with steady long-term revenues, while continuing to add value for its customers. The opportunities for a disruptive technology such as Netflix to continue to remain a relevant and leading player in the movie/television industry are limitless. The General Environment
Through the use of the PESTEL framework it is clear that the general industry Netflix is in is dynamic and continuously changing. People want to watch movies and their regularly scheduled programs. But they want to do it at their own convenience. It is not always plausible for someone to make it to the movie theatre to see every movie they would like to watch. Moreover, people may not always make it home from work in time to watch their favorite television programs. Platforms such as Netflix make it possible for viewers to still have a chance to catch up on movies or programs at their own convenience. What is more is that the technological devices we use on a daily basis are changing rapidly as well. Smart phones, and tablets are in the hands of people all across the world today, and have become a huge part of our daily lives. In today’s society we can check our email, pay bills, and use the Internet as we please. Consequently, the technological domain Netflix operates in is shifting quickly to adapt to these changes as well. Not too long after these changes, Netflix dived into the world of apps to adhere to customer’s needs. Netflix has profited in more ways than one in this environment for a number of key reasons. First and foremost, Netflix was original in its inception. It was the first large-scale operation of its kind. Furthermore, the amount of content available and...
References: Cholewa, Vincent, Lori Dreager, Greg Grilliot, Sze Y. Lee, Drew Wallace, and Sean Wright. "Strategic Management: Competitiveness and Globalization." Case 20 Netflix. N.p., Apr. 2009. Web. 19 Oct. 2013.
"Media Center." Netflix. N.p., n.d. Web. 21 Oct. 2013.
"Top Three Netflix Competitors: Who 's Challenging the Industry Giant?" FierceOnlineVideo. N.p., 21 Nov. 2012. Web. 21 Oct. 2013.
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