...Netflix Anthony Farias Strategic Planning for Organizations MGT450 Professor: Vivian Scott December 8, 2011 Abstract Founded in 1997, Reed Hastings observed; noticed and assessed that there was a growing demand for motion picture rentals. Netflix began with an offer for their ever-growing customer base in which competitors like Blockbuster and Hollywood Video had not brainstormed with the idea that would allow customers to select and purchase movie rentals right from the privacy of their own home. No need to wait in line in a retail store anymore for a secondary movie pick because their primary selection was ‘sold-out’; Netflix posed its strategic move against all other competitors and thus came into existence. In 2011 the conditions that all the home entertainment companies must implement to meet or exceed current standards is now more than ever needed with a lagging economy of more than three years. At the same time, consumers are striving to save money, time, and gas as all three of these conditions effect the movie rental industry. This research paper will address a brief history of Netflix, the competitive industry in which they compete, potential breakdowns, and finally an offer of speculation for how to address forecasted future breakdowns in a way that will turn them into positive possibilities. Netflix The vision of Netflix is simplistic: “Our vision is to change the way people access and view the movies that they love.” (Netflix.com...
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...movie rental needs has suffered a significant loss in revenue to the rise of RedBox and Netflix. The competitive advantage offered by the two companies has tapped into Blockbuster’s market and cause a lack of blockbuster for the company. Since 2009 the company has continue to reported decreased revenue and profits against its competitors. In 2010 the company filed bankruptcy and has since then implemented new services and products similar to its competitors, however, customer’s still prefer RedBox and/or Netflix. Once upon a time on a Friday night after work, you were looking to go home, relax, and watch a good movie. You come up on a big blue sign with yellow lettering, and think, “I’LL RUN TO BLOCKBUSTER!” Today, we’re looking for the nearest RedBox, or browsing Netflix for a good flick. There was time when families would take a trip to Blockbuster, order a pizza, and make it a movie night. Today, people have the luxury of not even leaving the house to find a good movie; thanks to Netflix. After a routine run to Wal-Mart, Walgreens, or Kroger’s it has become second nature to browse the RedBox, especially since the cost is only $1. But what has happened to good ol’ Blockbuster? Over the past few years Blockbuster video locations have steadily declined. Blockbuster, the once powerful source for movie and video game rental, has become nonexistent in some areas. Due to the rise of Netflix and RedBox, Blockbuster has experienced a decline in sales, continues to close locations...
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... 1 Paper Outline 1 Introduction of Qwikster – The Spinoff of Netflix 4 – 6 Implications 6 Commentary 7 Netflix’s Cancellation of Qwikster 7 Conclusion 8 References 9 INTRODUCTION Company Information Netflix Inc., established in 1997 and headquartered in Los Gatos, California offers internet subscription service, streaming television shows and movies. Subscribers of Netflix can watch unlimited television shows and movies streamed over the internet to their televisions, computers and mobile devices. Currently, Netflix offers DVD-by-mail (delivered directly to homes) only to its United States subscribers. The...
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...Research Paper: Netflix Founded in 1997, Reed Hastings observed; noticed and assessed that there was a growing demand for motion picture rentals. Netflix began with an offer for their ever-growing customer base in which competitors like Blockbuster and Hollywood Video had not – the allowance for customers to select and purchase movie rentals from the privacy of their own home. No one needed to wait in a snake like line in a retail store anymore for a secondary movie pick because their primary selection was ‘sold-out’; as such, the rivalry of the Netflix against all other competitors came into existence. In 2010 the conditions that all the home entertainment companies must implement to meet or exceed current standards is more important than any previous time in history. This research paper will address a brief history of Netflix, the competitive industry in which they compete, potential breakdowns, and finally an offer of speculation for how to address forecasted future breakdowns in a way that will turn them into positive possibilities. The vision of Netflix is simplistic: “Our vision is to change the way people access and view the movies that they love.” (Netflix.com, Hastings Reed, 2011). With more than 15 million current members, Netflix is the world’s largest subscription service for the streaming of television and movie picks and sending movies in the mail. New entrants are always a threat to existing companies like Netflix in the industry; however, Netflix continues...
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...Abstract This document will present a technology that has changed the way society sees the movie and TV industry. This paper will present details of how this technology impacted its industry, how it is used, how people, and competitors reacted. Examples will be provided of similar scenarios and what new opportunities this technology has presented to its market, plus how the government and legislation reacted toward this new technology advancement. Technology Effects Technology is a powerful tool that over the years it has evolved continuously providing the human with new options to be more precise in every aspect. Technology not only provides us with new emerging advancements, but they also can make a whole industry change with one revolutionary creation. An excellent example that can be provided of how technology can change an industry very fast is the online movie streaming sites and the self serve renting movie machines. These two different technology creations has come to make an impressive change on how the movie and TV industry currently operates compared to a few years ago. Many years ago the movie and TV industry was strictly dedicated to watching TV shows in the big old box we call a Television, and we could only watched movies at a movie theater or in the television. People would visit different store locations to rent their movies and watch them at home but things have changed drastically since then. These new technology advancements have changed how everything...
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...I. Current Situation a. Current Performance b. Strategic Posture i. Company provides a general strategy statement. Not publically available vision statement or mission statement ii. They are in the internet subscription business. They are in this so users can instantly watch movies or TV programs iii. The objectives is to maximize member satisfaction and month to month subscription retention. Corporate objectives: customer loyalty, profits, growth. Busniness objectives- customer service Functional objectives- Marketing and sales. They are all consistent with each other. They all have one goal and that is to be profitable and make sure the customers are satisfied with their business. iv. Strategy- pursuing new content deals and streaming rights to current season shows. Also looking at new ways to improve the subscriber’s experience. Encouraging multiple accounts in one household. v. Privacy policies, code of ethics, insider trading policies. All the policies are consistent with each other. They all want their employees and board members to act ethically. They want their nonpublic information to stay private and prohibit insider information trading. vi. II. Corporate Governance a. Board of Directors i. Mostly External members. Jay Hoag- Technology Crossover Ventures. Timothy Haley- Redpoint Ventures. Ann Mather- MGM holdings Inc. Leslie Kilgore- Linkedln Corporation. Richard Barton- Zillow, Inc. A. Battle- Aspen Institute. Reed Hastings- Chair of board ii. Significant...
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...high costs. Once the industry started evolving with new technologies, these stores became sunk costs for the retailer. Online-only retailers who enjoyed much lower costs than the brick and mortar stores were able to profitably charge customers a lower rate; however, at the same time, Blockbuster Video was saddled with the high costs of labor as well as the physical stores. It was not long before Blockbuster’s costs became too much for the retailer, as they were forced into bankruptcy. Today’s market landscape looks much differently than it did when Blockbuster Video was at its peak. Many more competitors fight for the consumer’s dollar; however, there are still a few dominant companies that stand out among them. These include Netflix, Redbox, Apple, and Amazon. Hypothesize the basic short-run and long-run behaviors of the model in the industry you...
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...Background Who is the king of the movie rental industry? Is it Blockbuster, Redbox or Netflix? Blockbuster was the king of VHS rental with their brick and mortar stores for more than 20 years. Netflix was the first to market with the idea of shipping DVDs directly to consumer’s homes but are now focusing their resources and attention to online streaming. Netflix is slowly getting out of the DVD and Blu-ray rental game by raising the prices of their DVDs and Blu-rays. Netflix is spending more money to increase the size of their online library for streaming. The two companies that are battling it out to be the king of the rental industry are Redbox, a company owned by Coinstar Inc., and Blockbuster. This paper will focus on how Redbox entered the market through Disruptive Innovation and what Redbox needs to do to better position themselves in a volatile market place. I will also look at the mistakes Blockbuster made and offer solutions on how Redbox can avoid the organizational decline that Blockbuster experienced. I use Wall Street Journal and peer-reviewed academic journals for my references. To understand the full scope of how Redbox entered the market I will look at the Disruptive Innovation Theory. Disruptive Innovation Theory is a term that was coined by Clayton Christiansen. Clayton Christiansen is a professor at Harvard Business School. He has written a number of books on the subject. In an interview done by Smith, Christensen defines disruptive Innovation...
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...Forces for Change Author Note This paper was prepared for Management 689, Managing Change and Organizational Learning taught by Professor Doyle. Forces for Change Discussion of the readings It is evident that change within a business or organization is integral to its solvency and profitability. Even more important is to execute the process of change in a deliberate, methodical and precise manner. If a company brings about change too quickly and erratically, it can burn out quickly like a supernova leaving loss of focus in its wake. Conversely, if change is done slowly or not at all, it can miss a crucial window of opportunity that can never be recaptured causing the company to lose market share or file bankruptcy. Visual media has changed tremendously over the years due to the dynamic technology improving digital media. Consumers rented movie videos from their local video stores and cable television was emerging. Ever changing technology changed formats from the Video Home System (VHS) to compact discs (CDs) and digital video discs (DVDs). The latter format had improved picture quality and longer viewing capacity. Visiting a video store was an enjoyable jaunt for many families, who wanted to enjoy movies in the convenience of their own home when the weekends rolled around. With this in mind, I was saddened to hear the demise of Blockbuster Video, which first opened in 1985 and recently announced this year that it was closing all its brick and mortar...
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...Summary Netflix is the world’s leading online streaming media company. By entering licensing agreements with major film studios, Netflix is able to distribute movies and TV shows online for a low monthly price. The 57 million streaming members in 50 countries can watch as much as they want from the content library, as long as they have an internet connected screen. Since 2007 they have pioneered delivery of TV shows and movies on a newly developed ecosystem that enables consumers to enjoy TV shows and movies directly on their TVs, computers and mobile devices. The company has three reportable segments: domestic streaming, international streaming and domestic DVD. The domestic and international streaming segments derive revenues from monthly membership fees for services consisting solely of streaming content. In the United States, members can receive DVDs delivered quickly to their homes, which is an additional 5.7 million users and 32% of net income even though it is on rapid decline. The domestic streaming content membership is 39 million members versus the international which is 18 million. In today’s market, there are several risk factors that Netflix faces and needs to handle to be competitive in the future. Some of these risks are the high licensing costs for the content they host, high reliability on other sources for streaming to customers devices and the need to constantly improve and innovate their corporate strategies (Netflix, 2013). Netflix expansion...
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...Table of Contents Company and Background....................................................................................................................................4 Rationale..................................................................................................................................................................4 Target Audience.......................................................................................................................................................4 Company History.....................................................................................................................................................5 Legal Status..............................................................................................................................................................5 Company Issues.......................................................................................................................................................5 Vision Statement......................................................................................................................................................6 Mission Statement....................................................................................................................................................6 Ethics.....................................................................................................................................
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...17 countries worldwide. It is headquartered in the Renaissance Tower in Downtown Dallas, Texas.[1] Because of competition from other video rental companies like Netflix, Blockbuster has seen significant revenue losses. The company filed for bankruptcy on September 23, 2010. Strengths * Lead market share of online rentals * Low fixed costs * Worlds largest selection of DVDs * Fastest delivery time of any online DVD rental company with over 35 DCs * Service: over 90% of DVD's are received by customers within one day of ordering * Strong website (shopability, navigation, reviews) Weaknesses * Can't control most important expense: shipping expenses * Older demographic has a hard time understanding their concept * Watch instantly feature only allows a small selection of DVD's * Distribution time * presence in only DVD segment Opportunities * Pricing segmentation (i.e., different plans) * Online distribution * Other types of rentals (Video games, educational, institutional, etc) * Internationalization * Expanding to Video Game rental Threats Rising stamp costs, Other larger retailers launching into similar space (i.e., Wal-Mart, Online digital distribution iTunes, Napster Redbox, Blockbuster allowing the rental of games in addition to movies Like most brick-and-mortar rental businesses, Netflix often has trouble providing enough copies of new, popular movies Strategy Used Blockbuster video began to sell its stock of dvds and video games before they...
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...Netflix Assets We classify our streaming content obtained through a license agreement as either a current or non-current asset in the consolidated balance sheets based on the estimated time of usage after certain criteria have been met, including availability of the streaming content for its first showing. We amortize licensed streaming content on a straight-line basis generally over the term of the related license agreements or the title’s window of availability Content is obtained through direct purchases, revenue sharing agreements and license agreements with studios, distributors and other suppliers. DVD content direct purchases or revenue sharing agreements. Streaming content is generally licensed for a fixed fee for the term of the license agreement but may also be obtained through a revenue sharing agreement. DVD library is its non current asset. The Company amortizes its direct purchase DVDs, less estimated salvage value, on a “sum-of-the-months” accelerated basis over their estimated useful lives. The accounting method for backlog DVD’s was changed after 1994. Our recent survey work suggests that NFLX streaming offering is compelling and should get more so as it acquires additional streaming content. In turn, this is creating a virtuous cycle whereby NFLX sub base grows, leading to greater financial resources to acquire more content to improve the user experience and continue to grow the sub footprint. Additionally we believe DVD costs may fall quicker...
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...like Netflix and VOD). These services can even better serve the customers’ needs for a lower price, while maintaining significantly lower operational costs. This is especially relevant for the VOD, providing both the selection and convenience of Netflix and allowing spontaneous purchases like Blockbuster. Second, Blockbuster’s equity is mostly invested in real estate and movie stocks. Thus, if Blockbuster would decide to alter it s activities to accommodate to the changing market, the resources needed to make this change happen are enormous (time, cost and physical effort). Third, based on their past behavior, it could be estimated that Blockbuster typically operates in a conservative manner, with slow reactions to market changes- this can be exemplified by their very late 2004 response to Netflix, and their blunt avoidance of reaction beforehand. Fourth, taking into account past performance of Blockbuster’s stock before 2006, we can identify a bearish trend, hinting towards the effect of the market forces on Blockbuster. Overall, we estimate that strong market competition from disruptive services enabled by emerging technologies, combined with the current position of Blockbuster, would not allow the company to survive in the market in the long run. We would have recommended being long on Netflix’s stocks. Netflix indeed recognized that VOD composed a significant threat, and that an immediate action had to be taken to sustain its market position. Considering that Netflix is an...
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...Netflix strategy has no brick and mortar stores, big stores with a large variety of movies in stock. Netflix relies on the internet for customers’ orders and mail system for the delivery. The company does not have late fees, fluctuating monthly fees, predetermined rental periods, instead has a flat fee. Netflix, allows its customers to view unlimited streaming of movies and TV shows for a monthly fee, and has also developed platforms to deliver its titles for Nintendo Wii, Xbox 360, PlayStation 3, and TiVo. Netflix also supports decks from Panasonic, Insignia, and Seagate, and a number of Android and Apple mobile devices including the iPad. Though Netflix has faced some challenges in previous years because of changes it made to its pricing strategy. Netflix has a strategy that would sustain its competitive advantage for many years to come. Netflix does not have to do or perhaps little marketing to rise to the top of the online marketing. A few well-placed ads will do the trick. Simplicity is the idea, so customers do not feel the pressure. Although, the numerous choices overall, makes Netflix an outstanding company to stay to watch the customer’s preference. During the company's rebranding strategy, there was much confusion with the customers. Some of the customers felt betrayed by Netflix and switched to other services such as, Hulu and Blockbuster. This being said, most of their customers stayed and went along with it. Though they lost some customers during this time, it...
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