...for consumers who wanted the movie viewing experience without making a purchase. The growth of the movie rental industry via an online presence I feel will continue to grow as more and more people become accustomed to the idea of owning or viewing things through a purely digital means. With a growth in any industry comes the inevitable competitiveness that we see between Netflix and Blockbuster. I would not be surprised to see Redbox throw their hat into the ring with online offerings in the future. 5) What is Netflix’s strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fit the competitive approaches that Netflix is taking? What type of competitive advantage is Netflix trying to achieve? Netflix’s strategy was a “six-pronged” one: 1. Providing comprehensive selection of movie DVDs 2. Providing an easy way to choose movies 3. Providing a fast delivery of selections 4. Having no due dates for return 5. A convenient drop-it-in-the-mail return procedure 6. Aggressive marketing to attract subscribers and build widespread awareness of the Netflix brand and service. Of the five generic comparative strategies...
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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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...forces which include: suppliers, buyers, potential new entrants, firms in the industry offering substitute products and rivalry among competing sellers. * Suppliers- my analysis shows that this is the strongest force in the industry. They are the one that set market prices and control the distribution of their product. The amount of movies produced all depends on them. If suppliers decide to vertically integrate forward, businesses like Netflix and blockbuster will definitely be wiped out of business. * Buyers- these are the people that accept the market prices. They have no say although the market works to satisfying their needs. They have limited choice in terms of finding other entertainment sources except visual entertainment and therefore accept whatever restrictions the market sets for them. This is not a strong force in this industry. * Potential new entrants- considering that competition is high in this industry and many businesses have set up their market status it is hard for new businesses to enter this market. Netflix is a dominant business in the market and has almost managed to wipe put blockbuster and movie gallery into bankruptcy. Therefore this force is also weak as potential new entrants will be highly unlikely to be able to sustain themselves....
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...International Expansion 6 ANALYSIS 6 Industry Analysis 6 Business Model 8 Company Analysis 9 Competitor Analysis 11 Amazon 11 Blockbuster 12 Redbox 13 ALTERNATIVES 13 Additions of Subscription Fee Package 14 Introduction of Netflix' Pay-For TV Channels 15 Domestic Elimination of DVD-mail-in Services in 16 Strategic Partnerships 17 International Expansion 19 Market Strategy 20 RECOMMENDATION 22 CONCLUSION 26 REFERENCES 26 EXECUTIVE SUMMARY Netflix is the world’s leading subscription service provider, offering its members access to an extravagant collection of TV shows and movies. Initially, the company offered its subscribers a low price, single monthly plan, consisting of both the unlimited Internet video streaming service and a DVD-mail-in service. Subscribers could “watch TV shows and movies anytime, anywhere.” In July 2011, Netflix eliminated the combined plan and separated the two services into their own monthly plans. If subscribers wanted to continue receiving both services, they were obliged to sign up for both the services separately, Consequently, the resulting price increase of the new “combined” plan significantly increased subscription cancellations and resulted in a 50% drop in Netflix’ share price over one month ( Yahoo Finance, 2013). The Internet video streaming industry becoming increasingly more competitive, particularly due to the fact that many substitutes exist and number of competitors is increasing. In addition, the...
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...Netflix Case Study * Company Overview Netflix is the world's largest online movie rental service, providing more than seven million subscribers access to more than 90,000 DVD titles plus a growing library of more than 5,000 choices that can be watched instantly on their PCs. The company offers nine subscription plans, starting at only $4.99 per month. There are no due dates and no late fees – ever. All Netflix plans include both DVDs delivered to subscribers' homes and, for no additional fee, movies and TV series that can be started in as little as 30 seconds on subscribers' PCs. DVDs are delivered free to members by first class mail, with a postage-paid return envelope, from over 100 U.S. shipping points. Nearly 95 percent of Netflix subscribers live in areas that can be reached with generally one business day delivery. Netflix offers personalized movie recommendations and has two billion movie ratings. Although, very successful completion grows which are threats to the company. Netflix needs to create a strategy to be able to Partner with cable companies and networks such as HBO, Cinemax that do not license any of their series. They need to create a team hence forth, spend and analyze critically their hiring decisions. This team will be monitoring, evaluating and disseminating the information from the external and internal environments to key people within the organization. They need to create a pool of highly qualified experienced personnel that would efficiently and effectively...
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...Since founded in 1999, Netflix has grown to become the world’s largest online movie rental service. In the beginning of 2007, Netflix surpassed 6.3 million subscribers. With a catalog that includes more than 100,000 titles, Netflix is leading the movie rental market. Netflix’s subscription-based business model was a disruptive innovation in the movie rental business. By using the internet, Netflix focused on providing convenient and affordable prices for an entertainment industry that was already highly popular. Based on a product that consumers already loved, Netflix’s business model was profitable because it improved the consumer’s rental experience. The company aimed to become the best cost provider. As part of its competitive advantages, Netflix has an intuitive website (easy to use), personalized movie recommendations, and excellent customer service. Netflix has been rated No. 1 in online retail customer satisfaction by Neilsen Online for the past 3 years and for nine consecutive periods by Forsee/FGI Research (Netflix, 2009). Netflix’s strategy for success has included providing a comprehensive selection of movies; an easy way to choose movies, fast delivery, a no late fees policy and a convenient drop it in the mail return system. These strategies ensured a competitive advantage to Netflix and threatened to make the traditional video store obsolete. A combination of its business model and strategic approach carry out the mission of the company. Diagnosis of...
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...Question #1 „Would you buy Blockbuster stock or short it at the time of the case? How about Netflix? Why?“ That’s a difficult question because the case was written in November 2007 and at that time BlockbusterInc. I would prefer to sell the shares of Blockbuster Inc. because their management made a lot of wrong decisions in the past, which still affects the market share and the outlook of the company. We think that it was a big mistake to underestimate the importance of entering the online DVD retail market as soon as possible. This decision was a perfect example of marketing myopia because it wasn’t very customer orientated. They had seen themselves in the video retailing business but they are in the entertainment business and they under-emphasized customer needs and wants. And if you look at the stock quotation of Blockbuster Inc. you can see that there is a peak in 2002 (fifth consecutive year of same-store sales growth; IPO of Netflix) and after that the share price decreases significantly until today. Failures in the management stopped their growth and that‘s why Blockbuster Inc. is a perfect example for marketing myopia. If you look at Netflix the situation is completely different. Their management didn’t make the same mistakes. They are very customer oriented and they changed their marketing strategy to satisfy customer needs and facilitate the access to a huge personalized movie library even if the customer isn’t very familiar with the Internet or the “online...
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...Summary Netflix Inc. (Netflix) is right now the biggest online supplier of DVD rentals in the US. Established by Reed Hastings in 1997, the organization offers month to month prepaid rental administrations using its online web search tool, where the organization then sends DVDs to supporters by means of the United States Postal Service (USPS). Netflix has several critical success factors such as overall cheap costs, convenience and many more. The details for each factor will be revealed at the later page. Netflix is still in the growing stage and has to face a lot of obstacles before making it to the top in online streaming. Several recommendations are stated to improve the company such as investing more in technology. 2.0 Company Background Source: www.jobsape.com Source: www.jobsape.com Netflix Inc. is an online television network with more than 44 million members in over 40 countries worldwide. The company was incorporated in 29th August 1997 and its headquarters is located in Los Gatos, California. In 1999, Netflix Inc. started its own subscription. By 2009, Netflix Inc. offered a collection of 100,000 titles on DVD and had more than 10 million subscribers. Netflix Inc. is an online entertainment retailer that provides intangible products and services to its customers. Netflix Inc. provided online movies and television series to its customers. The members can watch as much as they want, anytime, anywhere, on any screen that is connected to the Internet. Netflix Inc....
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...Netflix: Case Study Presented by Susmitha Annamaneni Overview World’s largest online movie rental service Founded by Reed Hastings Established in 1998 and headquartered in Los Gatos, California More than 90,000 DVD titles Offers flat rate rental-by-mail to customers Growing library of more than 5,000 choices that can be watched instantly on their PCs Over 6.7 million subscribers They have over 55 million discs and ship 1.6 million a day, on average Corporate History Netflix was incorporated on August 29, 1997 Began operations on April 14, 1998 Initiated an initial public offering (IPO) on May 29, 2002 selling 5,500,000 shares of common stock at the price of US$15.00 per share On June 14, 2002, it sold an additional 825,000 shares of common stock at the same price Netflix posted its first profit during fiscal year 2003 Netflix mails about 190,000 discs per day to its 670,000 monthly subscribers. Subscriber counts have increased from one million by the fourth quarter of 2002 to around 5.6 million at the end of the third quarter of 2006 How Netflix Works? Features Instant Viewing Queue Browse Movie Recommendations Community Netflix Facts Ratings Rental Habits Recommendations Customer Satisfaction Inventory Volume Environment Services Flat-fee service Various plans Sells gift subscriptions Instant Viewing Sells used DVDs to its subscribers Pricing Levels 1 1 2 3 4 5 6 7 8 at-a-time...
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...distribution and inner competiveness of your corporation, I suggest taking some measures to tackle the challenges. Among them, the most important thing is to build Netflix's Eco-System and segment customers to offer them different services. The basic factor contributing to Netflix’s success is highly customized experience based on the strong data collection and analysis system. Thanks to it, Netflix first developed an advanced recommendation engine, making it possible to offer every customer the movies he or she most likely watches. This not only saves customer’s selection cost, making watching movies a more relaxed and convenient experience, but also helps Netflix maintain a good relationship with those movie creators because Netflix can bring some lesser-known movies and even some movies that won’t enter theaters to customers. Besides this, the system could also predict the demand, preference and taste of customers, thus helping managing inventory more effectively with less stocks. The second important factor is the better experience customers can have when they rent movies from Netflix rather than Blockbuster. Monthly subscription without due dates and late fees means more freedom and flexibility, online browse and selection means quantity and variety across genres, and receiving and returning movies via mail means comfort and time-saving. All this satisfy people’s desire for convenience and also love for movies, so it becomes appealing to customers and attract increasingly...
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...Netflix (discussed above), the largest online DVD rental service in the U.S., offers a flat-fee DVD movie rental service that, by 2007, was serving over 6 million subscribers from its collection of 75,000 titles.32 Subscribers can use the website's browse function to search for movies by genre, and use an extensive movie recommendation system based on other users' ratings to add to their ordered list for delivery via mail. At its initial launch, the Netflix business model was based on a pay-per-rental service, but this initial pricing model did not succeed, and the company almost failed. It was clear to management Netflix had to rejig its business model and, between September and October 1999, it reinvented itself with a subscription model (the ‘Marque Program’). It ended its pay-per-rental model entirely, and evolved the monthly fee program to allow subscribers to rent any number of DVDs per month (although only a limited number at any one time). The model was supported by a system of regional distribution centers which ensured next day delivery to over 90% of subscribers. Clearly, it took a while to be able to ascertain the right price points and the manner of pricing that was most acceptable to the customer base for its new service; but as Netflix management figured out viewer convenience, wants and willingness to pay, it adjusted its business model accordingly. This ability to perceive and adapt saved Netflix and laid the foundation for its growth and development: by 2006...
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...Name:Leuteris Stamatiou Case 2:Netflix Movie rental business The movie rental business is consisted by three major players, Netflix, Blockbuster and Wal-Mart. Netflix was founded by Reed Hastings, a man who captured the idea of Netflix when he was late returning the movie Apollo 13 to his local video store and being charged with a forty dollar fee.Netflix is the number one in the movie rental business but if the company had delayed its public stock offering, the firm would be greater and stronger for its rivals. On the other hand Blockbuster a company dated back to 1985, when David Cook sought to fill a niche market for customers wanting to rent a variety of VHS titles, and Wal-Martthe largest firm in the United States ranked by sales, are the major rivals of Netflix. Blockbuster and Wal-Mart are the ones who mimic Netflix with cheaper rival efforts and “declared” a price war in the movie rental business. But in the end Wal-Mart dumped the experiment in DVD-by-mail and Blockbuster had been mortally wounded with million of dollars losses leaving Netflix alone at the top. Core business/Value-chain For a monthly subscription fee under the standard plan, subscribers can rent as many digital video discs (“DVDs”) as they want, with a number of movies out at a time, and keep them for as long as they like. There are no due dates and no late fees. DVDs are delivered directly to the subscriber’s address by first-class mail from distribution centers throughout the United States...
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...COMPANY CASE Netflix: Disintermediator or Disintermediated? PRESENTED BY: DANIEL RICARDO ORDOÑEZ 201312625 MARIA LUCIA PACHON 201311104 YALILE KATHERIN ROA 201313192 THE SABANA´S UNIVERSITY BUSSINESS ADMINISTRATION MARKETING GROUP 1.2 2015 1. BACKGRAUND Netflix is a company that was created from the need generated by getting movies to watch from the comfort of the house, although at that time the companies who led this market were Blockbuster and Redbox , but to get them you had to approach a local Blockbuster or go a supermarket or store nearby where a dispenser Redbox addition these had a specific time to be returned, if not met you could have a fine is found, Netflix identify these weaknesses in them and became its advantages as well when you wanted to watch a film could access the internet make your Netflix account and solicitabas the list of movies you wished to see them received and send you the movies , these could be the time you wished and return , so Netflix quickly gained the lead. But with technological advancement and different devices that were created Netflix realized that people prefer to search online movies so they should not leave home or wait for them to arrive , so the company decided to create direct platform on which there are not only movies but also get series , plus Netflix decided also be associated with the different technological advances for these Netflix had already built into the device as we see when we buy a PlayStation...
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...Corporate Financial Analysis and Security Research of Netflix, Inc. [pic] . Finance 307, Professor Peter Lou GGU, Summer 2013 Table of Contents Business Description……………………………………………………………………….. 3 Industry Position and Business Model…………………………………………………… 4 Industry Analysis……………………………………………………………………………. 4 Historic Financial Analysis……………………………………………………………….. 5 Weighted Average Cost of Capital……………………………………………………….. 6 Financial Statement Analysis……………………………………………………………… 7 Bond Valuation I……………………………………………………………………………. 10 Bond Valuation II…………………………………………………………………………… 11 Stock Analysis……………………………………………………………………………….. 11 Off-balance Sheet Items……………………………………………………………………. 12 Revenue and Earnings Growth Analysis…………………………………………………. 12 Conclusion……………………………………………………………………………………. 13 Exhibit I……………………………………………………………………………………….. 14 References…………………………………………………………………………………….. 15 Business Description Below are some fast facts regarding Netflix and a quick history snapshot. |Fast Facts | |Founded |1997 | |Location |Los Gatos, CA | |Industry Sector |Internet Television...
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...Background: • Netflix is an online video streaming services provider and DVD rental company in United States. • It is the largest player in the area of video streaming boasting of 25 million subscribers. • Netflix made use of Amazon Web Services to gain knowledge about the full details of its subscribers’ viewing patterns. • By shifting its computing architecture to cloud, it boosted its data mining prowess. • Content owners saw the growing business of Netflix as major competition and subsequently started charging more amount of money from Netflix, sometimes even bringing the licence arrangements with Netflix to an end. This made the life tougher for Netflix. • Netflix, as a strategy to evolve its business, decided to have the original content...
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