...business history and current business situation Netflix company is in. The case begins talking about how Netflix started with a bang making positive profits and revenues, but has recently hit some trouble due to strategic mishaps negatively affecting the company. The article then begins to describe the industry and various competition within it, and how they do business. There is some information on market trends in home viewing of movies, but most importantly the meat of the article discusses Netflix’s business model and strategy in detail. The one primary problem/key issue facing Netflix is how it will continue to remain the subscription-based leader in the instant movie streaming/DVD delivery industry. There are many rival competitors emerging offering a wide variety of services and options to consumers, and it is important Netflix modifies its business model/strategy and uses its brand recognition/positive traits efficiently. The best-case scenario is Netflix modifies its strategy to once again differentiate itself from competition. Also, it would be ideal that for the global markets targeted to generate massive revenue/profits. The likely scenario is that Netflix will steadily improve internationally, but retain a firm hold of those markets before anyone else has. Also, it is likely that Netflix will remain prominent but will be in tough competition with rivals such as Amazon Prime and Hulu. The worse case scenario is the global market completely failing, specifically...
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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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...service and to deliver a growing subscriber base and earning per share every year. In May 2010, Netflix’s strategy was producing impressive strategic and financial results. During the past five years, Netflix had emerged as the world’s largest subscription service for streaming movies and TV episodes over the Internet and sending DVDs by mail.” B. Analysis I. Strategic Analysis 1. Competitive forces in the movie rental industry a. Rivalry among companies: strong Netflix have to deal with rivalry from Blockbuster, Redbox, and video-on-demand providers. The battle includes many competitors and each of them is trying their best to attract the customer. Customer has many options and their choices are based on some factors: * Price: rent each DVD or buy subscription plan/ what kind of plans * Convenience: stream from your device or got DVDs then return * Variety of rental library: how big and how vary the company library is * Availability: customer who choose to stream movie over internet or VOD never face the situation when there are no available DVD to rent like customer who choose to rent real DVD from store. * Ease of use: streaming customer can choose to see movie in more than one device. It is also easy for them to browse the company library. * Late Fees: Some providers require late fee for DVD. Some providers (like iTune) limited the time customer can keep the movie they download. * Reputation of the provider. All competitors...
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...room at Netflix’s corporate headquarters in Los Gatos, California. Hastings, the founder and CEO of the company, which pioneered online DVD rentals, was preparing to unveil Netflix’s highly anticipated entrance into the online video market. Many industry observers believed that the ability of customers to order movies through their computers for instant viewing, commonly referred to as video-on-demand (VOD), would quickly impact the large user base for Netflix’s core business. Hastings looked across the third floor of the office building and the conference rooms named for some of his staff’s favorite films. A love of movies clearly ran deep among Netflix employees, and he was confident that one way or another, his team would maintain the company’s position as a leader in the home video market. But, as he reflected upon the years of investment and discussions surrounding the new feature that Netflix would be offering its customers, he could not help but think of the merits of the paths not chosen. As the management team filed out of the board room around him, Hastings returned his thoughts to the present. While he believed that the DVD rental market would remain healthy for years into the future, he knew that this announcement would impact not just the market’s perception of his company but its ability to sustain its position as a giant in the media industry. With new resolve, Hastings returned to his desk to review his forthcoming announcement one more time. Company...
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...Netflix Video Game Streaming Name MKT/421 Date Instructor Name Netflix Video Game Streaming Marketing Plan: Phase I Trying to introduce a new product or service into an already well-established industry can be an intimidating, yet profitable idea. Take Netflix and the media rental industry as an example. In 1997, Netflix made their debut into the online media rental industry (Netflix, 2013). About 10 years later, their flat rate monthly rental fees, their stellar DVD-by-mail service, and their streaming media options had turned Netflix into a media rental powerhouse. However, video games are one aspect of media rental and streaming that the company has consistently steered clear of. To demonstrate that Netflix could (and perhaps should) offer video game rental and streaming options as their next step for growth, a marketing plan can be established. This marketing plan should include: an overview of the Netflix organization; a description of the proposed video game services; an explanation of the significance of this new service to Netflix; a SWOTT (strengths, weaknesses, opportunities, threats and trends) analysis of this service; and the marketing research approach and strategy that would be used to implement video games into Netflix’s service lineup. Organization overview. Established in 1997, Reed Hastings and Marc Randolph founded Netflix with one goal; to revolutionize the way people enjoyed entertainment (Netflix, 2013). At its inception, Netflix was a membership-based...
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...Report XXXXXX MKT/421 April 13, 2016 XXXXXX * Elements of a Marketing Plan Report In this day and age marketing strategies must keep up with the changing time in technology and how society sees the world in order to stay relevant. Marketing is a business technique used by companies to maintain, satisfy, and make a profit from their customers while staying successful. The company chosen to be discussed in this paper is Netflix. First, this paper will explain the specific key environmental forces created for opportunity for the company. Second, it will discuss five environmental forces and trends to influence the company’s marketing efforts and future product offering. Then, this paper will explain what differentiation strategy the company should undertake to encourage their target market over other competitors. Lastly, it will analyze lessons learned from the Geek Squad case study. Environmental Forces Netflix is a DVD rental and online streaming service. The key environmental force created for the company when they first started out is the DVD mail service. Before there was Netflix, customers had to go to rental stores such as Blockbuster to rent movies. One issue that customers would have is the stores running out of the movies they wanted or possibly not even carrying those movies to begin with. Shipping the movie gives customers more time and takes less energy than having to drive to the store to pick out what movies they want to watch. The founder of Netflix...
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... Nevertheless, technology had a fast-paced evolution in the last few years and various online streaming services appeared on the market, becoming remarkable alternatives to traditional pay TV. Nowadays, people have at their disposal a wide range of services from Netflix and Amazon Video to Hulu that allow them to watch their favourite movies and TV series at any time and thorough a multitude of devices. The time when we all depended on the living room to watch TV has long gone. Internet gives us the freedom to watch TV anywhere either we are inside the house or in a public transportation. NETFLIX: THE MARKET LEADER Netflix was founded in 1997 as...
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...To: Reed Hastings, Founder and CEO From: Omar Medina Consulting RE: Growth strategy/Penetration of the video-on-demand (VOD) market Netflix’s competitive environment is becoming hostile; a strategy for entering the video-on-demand (VOD) market must be selected in order to achieve growth targets. This strategy must address issues related to user connectivity, content limitations and initial target market. It is recommended (Exhibit 1) that Netflix develop, and integrate, a VOD platform for its core offering. Netflix’s current subscriber base is built on early adopters; these individuals, with free VOD access, will support and help market the VOD platform. Partnerships must be established to expand connectivity options (Exhibit 2) to overcome a key barrier. Strengthening relationships with studios and TV networks is a primary focus in order to obtain digital distribution rights. As a content risk management measure, Red Envelop Entertainment will continue to aggressively pursue high quality content for acquisition. Several alternatives (Exhibit 1) were evaluated and ranked against key decision criteria. Customer satisfaction (quality of the experience) is the most important element to Netflix’s business. Netflix has one channel for customers, their website. With high customer acquisition costs, a positive experience is necessary to reduce churn rates. High customer satisfaction will increase revenue growth by adding and retaining subscribers. As a public company...
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...Netflix’s Generic Strategies Netflix is using a focused differentiation strategy. Netflix’s subscriber base consisted of three types of customers: those who liked the convenience of home delivery, bargain hunters who were enthused about being able to watch many movies for an economical monthly price, and movie buffs who wanted access to a very wide selection of films. SWOT Analysis Strength: * Netflix is the world’s largest subscription service for streaming movies. It had attracted 14 million subscribers as of April 2010. * Netflix has the fastest delivery time compare with any other online DVD rental companies. As of 2010, additional improvement in Netflix’s distribution and shipping network had result in one-business-day delivery capability for 98 percent of Netflix’s subscribers * Netflix has no late fees and no due dates which eliminated the hassle of getting DVDs back to local rental stores by the designated due date * Netflix had been highly rated in online retail customer satisfaction by Nielsen Online and ForeSee/FGI Research. Weaknesses: * Netflix accesses only to internet users * Subscriber cancellations are increasing from 3,113,000 in 2006 to 6,444,000 in 2009. (To grow its subscriber base, Netflix should attract new subscribers as well as avoided cancellation.) Opportunities: * As the result of growing demand of streaming video...
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...is part of the larger industry of “watching movies in the home.” However, since Netflix is already positioned in this market, with its online DVD rentals, we will examine the smaller 5 portion of the market that is streaming online movies. This business is too closely related to the movie downloading service to be considered as a separate market. Threat of Potential Entrants Today, internet video rental industry is very profitable and still has a very good develop prospect. After Netflix’s success, the whole video industry starts to change gradually, and more and more people start to consider entering this field. However, for most of those potential entrants, this industry has some big barriers to entry. First of all, the service in this industry is already very complete. With its seven-year-development, Netflix has improved its service better and better; its customers are getting more and more satisfied. For potential entrants, it is extremely difficult to find some new service to add in its new website. Therefore, the opportunity for those potential entrants to defeat Netflix is very limited. Second, high capital requirement is a big problem for potential entrants to enter. To establish...
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...Netflix 9/25/2012 Section 003 Case: Netflix’s Business Model and Strategy in Renting Movies and TV Episodes 1. How strong are the competitive forces in the movie rental marketplace? Do a five-forces analysis to support your answer. Substitutes: There is a strong force of substitutes. Consumers can buy DVDs at retail stores, rent movies via vending machine like Redbox, rent online, watch movies via TV packages and premium movie channels, pay-per-view movie rental, watch movies on the internet via youtube and amazon.com, and consumers can obtain pirated DVD. Buyers: There is a strong force by the buyers, there are a lot of substitutes and companies have to fight with rivals for a competitive price and customer service. Pleasing the consumer is huge in this industry. Suppliers: There is a mediocre or low force by the supplier because there are a lot of different companies that offer the same goods. The DVD rental industry has a lot of substitutes with the same product just a different way of obtaining the movies. Potential for new entrants: The potential for new entrants is weaker because existing companies like Blockbuster are struggling to earn healthy profits. The convenience of movies online and through TV companies are over powering the in store business models that Blockbuster and Movie Gallery had. Rivalry: The force of Rivalry is very fierce because companies are coming out with new ways of obtaining movie rentals. The internet based companies are making...
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...board room at Netflix’s corporate headquarters in Los Gatos, California. Hastings, the founder and CEO of the company, which pioneered online DVD rentals, was preparing to unveil Netflix’s highly anticipated entrance into the online video market. Many industry observers believed that the ability of customers to order movies through their computers for instant viewing, commonly referred to as video-on-demand (VOD), would quickly impact the large user base for Netflix’s core business. Hastings looked across the third floor of the office building and the conference rooms named for some of his staff’s favorite films. A love of movies clearly ran deep among Netflix employees, and he was confident that one way or another, his team would maintain the company’s position as a leader in the home video market. But, as he reflected upon the years of investment and discussions surrounding the new feature that Netflix would be offering its customers, he could not help but think of the merits of the paths not chosen. As the management team filed out of the board room around him, Hastings returned his thoughts to the present. While he believed that the DVD rental market would remain healthy for years into the future, he knew that this announcement would impact not just the market’s perception of his company but its ability to sustain its position as a giant in the media industry. With new resolve, Hastings returned to his desk to review his forthcoming announcement one more time. Company Background ...
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...where the graphical and video display-ad market is estimated to grow to $200 billion (Efrati, 2012). It will also further build on the expansive Google acquisition model strategy and use of capital (Rosoff, 2012). Google enjoys proven success and market dominance in online advertising. With its graphical and video advertising successes through its YouTube platform and thousands of other sites, the company has established a significant competitive advantage in the market of display-advertising. With Netflix, Google would leverage its ad expertise to pair advertisements with video search requests and video themes/genres. This acquisition will continue the Google growth model of winning loyalty across every facet of the internet experience which translates into "overall time spent on Google services,[...]more time (for consumers to be) exposed to ads, [and] increased brand loyalty (Young, 2011). The acquisition would provide a diversified monetization model of membership/fee based service which provides strong direct customer and revenue competition to Hulu (streaming video currently offered only to users in Japan and the USA and its overseas territories), Amazon Prime Streaming and Apple's iTunes in the global market (Wikipedia, 2012). If leveraged by Google in the manner explained in the following report, Netflix’s current base of 21.5M subscribers paying $8 per month per contract will add significant profitability. This strategic revenues diversification -- in combination with...
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...Chin Yeung Siu Ruiqi Rachel Wang Introduction: Since the 1910s when Charlie Chaplin created his first silent films, movies have been a staple in American culture. For over half a century, “the big screen” was the only link between first released Hollywood films and captivated audiences nationwide. The advent of modern technology like the VHS tape and the DVD, however, has provided viewers with a convenient way of viewing movies, new and old, no longer playing in theaters. In addition, cost considerations have made DVDs and VHS tapes ideal for short-time rentals. Thus these inventions and the terms of their usage have helped to create a movie-rental market within the larger movie industry. Rentals and other theater substitutes have become essential to the movie watching experience because the theater no longer holds the monopoly it once did. While movie theaters are still widely popular, many people dislike the inconvenience of finding a local theater playing the right movie, driving there, and then standing in long lines to buy a ticket. Some do not appreciate the large crowds that often include cell phone talkers and loquacious teenagers. And some simply don’t want to shell out ten dollars to a movie that has the chance of being Ishtar. For whatever reason, there is a large demand for rentals and substitutes from audiences who want to see the movies they missed in theaters, the movies released years ago, and the movies that aren’t quite worth ten bucks ...
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...| 2012 | | Prof. Gervais Victoria Skarbinski | [Netflix] | A case analysis on the movie rental company Netflix. | The major portion of revenue that Netflix derived came from its unlimited streaming plans that included either one, two or three DVD’s out at a time from the mailing system. Netflix began as a DVD rental provider that allowed customers to use the internet to select the DVD’s they wanted to rent. Netflix’s strategy so far has included offering various plans that incorporate unlimited streaming to a viewing device from the internet and a mail order system that sends physical DVD’s to the customer for an unlimited amount of time without any additional fees (so long as they still have a subscription with the company). With consumers moving toward the digital era, which Netflix has embraced, Netflix has to focus on continuing to be an innovative leader in the movie rental industry. 1. Identify the key elements of Netflix’s strategy. What competitive advantages is Netflix trying to achieve? Netflix strategy consists of at least six major elements, but its key elements consist of: * Providing subscribers with a comprehensive selection of DVD titles. * Giving subscribers a choice of watching streaming content or receiving quickly delivered DVD’s by mail. * Offering nine different variations of their service with subscription costs ranging from $4.99 to $47.99 with a free one month trial on any service. One of the most basic features that...
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