Megan Welshymer
BA 370
9/29/15

Extra Credit # 1
Case Study: The Netflix Rollercoaster

1. Netflix’s original marketing strategy offered several flat-rate monthly subscription options; in which, members could stream movies and shows via the Internet or have disks sent to their homes in a pre-paid and pre-addressed envelope. Free from the despair of due dates and late fees, members could keep, up to, eight movies at a time. Upon the return of a disk, Netflix would automatically mail out the next movie from the customer’s video queue. Members were able to change and update their queues as frequently as they liked. The sheer innovation of Netflix’s strategy encouraged several competitors to enter the market to compete directly, forced existing competitors, such as Blockbuster, to extend their services to include mail delivery, and inspired the very creation of Redbox. Regardless of all the competition, if Netflix can remain on the cutting edge of their craft, by continuously offering the latest releases and the most far-fetched options; they should be able to maintain their competitive advantage, because they offer a valuable, reliable service at a consistent price. 2. Reed Hastings’ strategic change and rapid reversal affected Netflix’s fourteen million customers in several ways. First, the company launched a streaming-only plan for $7.99 per month in November 2010, and increased the cost of each DVD plan by $1. Customers interested in both services, were able to sign up for the streaming plan and add DVDs for $2. Netflix was incorrect in their assumption that most users would drop their mail service, due to the fact that the DVD collection offered a much better selection than online streaming. Only eight months later, Netflix unleashed another new pricing plan that would go into effect September 1, 2011; unlimited streaming, with no discs,