Current Goods and Services
The company Netflix is known as a storehouse of content. (Investopedia, 2015) The content includes movies, documentaries, TV shows and educational programs. Viewers pay a flat monthly fee to view the videos anytime and on any type of platform. They also offer a mail order DVD rental through DVD.com. This service allows you to list DVD on a queue to be mailed for viewing and consumers are never charged a late fee.
Areas of Operation
The company’s headquarters are located in Los Gatos, California. Today Netflix has over 100 shipping locations throughout the United States. These locations serve globally and throughout the United States. Today Netflix provides services in over 60 countries throughout the world.
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This will determine how Netflix can be the best in services to sustain future growth in the current market. It is also important to evaluate revenue versus current pricing. This will help understand the impact on consumers by utilizing the price of elasticity of demand to guide us. Today, Netflix has over 60 million subscribers in 50 countries. As the demand for video rises, Netflix will expand into over 200 countries by the end of 2017. (Heisler, …show more content…
As the new videos are released or developed the demand rises. As the U.S market and International market rises and strengthens, the company is prepared to continue its expansion to improve the global sales. (Heisler, Y.n.d.).
Price Elasticity of Demand
As the demand for content increases, Netflix’s demand rises as well. Netflix claims that the largest share of their video streams market is from their library of licensed content. (Caporaso, T. 2014) It is believed that providing entire seasons versus episodes it promotes “bing-watching” habits. (Caporaso, T. 2014) To meet and maintain consumer needs, there is ongoing requests for more entertainment options. Netflix is continually expanding and updating its inventory to meet consumers’ needs and to compete with competitors.
During the expansion hike of Netflix, their competitor Amazon announced a multi-year deal with HBO. Amazon announced they were providing their prime members with HBO’s exclusive online access to in addition to the Showtime
Netflix first grabbed the attention of many customers when, unlike the local video rental store, they eliminated due dates and late fees charged by traditional video rental stores. The Netflix model allows customers to pay a monthly subscription fee for which they receive as many movies as they want in a month. The subscribers order DVD’s via the firms website and delivered through the United States Postal Service. Subscribers keep the movie as long as they want and when finished return it to Netflix in a postage paid envelop.
The Netflix Company was founded in August 29,1997, by Reed Hastings and Marc Randolph. It was not until 2007, where Netflix started to expand to new territory by offering media streaming. Since introducing online media streaming they have become a multi-billion-dollar company. They surpass the net worth of Hulu by almost double their amount, showing how popular this video streaming service truly is. Along with any successful business, they must have policies they follow to calculate any revenue or investments.
As advance technology of fiber-optic developed and is on the rise, everyday there is another story about entertaining movies on demand and streaming online is with ease. Those developments which let movie’s viewers sit in the comfort of their home or anywhere with access to the internet can stream instance movies with a push of a bottom. They no longer need to make a trip to the movie’s stores for movies rental and return, so that is why movie shops fail and filed for bankruptcy bring a symbolic close to the “let’s go rent a movie” era. Blockbuster LLC, formerly Blockbuster Entertainment Inc., both owned and franchised American-based giant provider of home movie and video game rental services through video rental stores, later adding movies by mail, streaming online and video on demand. Due to the peak of fiber-optic and competition from companies such as Netflix, Redbox, and GameFly, Blockbuster became the victim of digital media and filed for bankruptcy on September 23, 2010 due to significant lost in revenue.[3]
Companies like Amazon and Netflix are very effective in predicting what customers normally buy and watch. Knowing what your customers are or are not buying will allow you to position products that they are statistically likely to purchase based on recent transactions and activity. This is a powerful tool for Netflix because it keeps users engaged and actively using the service but also allows them to tailor their investments in content towards items that are more likely to keep users active on their site.
Charging a monthly fee for unlimited rentals, Netflix eliminates due dates and late fees, as well as eliminating the long lines of a brick-and-mortar store. ? Netflix uses their great customer service to keep customers happy, which keeps customers from canceling their subscription to the service. If there is a problem that arises during the rental process, such as a damaged DVD, or lost DVD during the shipping process, Netflix addresses the problem immediately, and never charges the customer for the problem. ? Netflix was the first company to offer DVD rentals over the internet. By leading the industry in innovation, selection and delivery time, Netflix enjoys the benefits of a strong brand image, and strong relationships with DVD suppliers and manufacturers.... ...
Netflix is a great website/app. Netflix has over three thousand movies and TV shows, and a variety to choose from. The organization is a site or an app, where people can watch movies and TV shows for as low as eight-dollars a month. Netflix has many genres. They even have a section just for kids.
As the firm moves forward, top managers must pay attention to staying unique to sustain a competitive advantage. Netflix does not own their content, nor do they have any tangible assets. Netflix is a part of a broad range of network users. As technology continues to grow exponentially, Netflix will have to be readily adaptive to change and innovation. Technology never stops growing and evolving, therefore, Netflix’s business platform should never stop growing and evolving. At the same time, they must be careful to remain user friendly and customer centric by keeping the technology at a level where users will not have to obtain a certain set of technological skill sets.
Netflix was originally known as Los Gatos, which started off as an online rentals of DVD company. Netflix adopted its name in 1997, by its CEO Reed Hastings and co-founder Marc Randolph. Netflix had initially started renting out DVDs for a monthly fee of $20, members could choose three movies at a given time. Netflix used the low-tech solution of mailing the DVDs by United States Postal Services. But once the DVD’s are in house, its video on demand: the movies can be watched whenever the viewer wants without incurring huge late fees.
As concluded before Netflix earned 5,077,307 while Amazon ended with the resulting 4,601,593 determined from the graph above and Hulu average around 1,000,000 (Video Streaming (SVoD) Worldwide Statista Market Forecast, n.d; Compare Companies, 2017). The total sum of the 2016 revenues of Netflix, Amazon, HBO and Hulu was $5,974,678,900 with Netflix garnering 8.5%, Amazon at 7.7%, HBO at 99% and Hulu 1.6% of the market share. Although 18% of unaccounted is present due to complexities of the streamlining market the percentage rates indicate that HBO has excellent control over the streamlining market making HBO one of Netflix's strongest competitors to an oligopoly market (Market Structure Microeconomics Assignment, n.d.). The oligopoly market brings competitiveness combined with services that are similar in options and price such like Netflix, Amazon, HBO and Hulu (Market
As of 2015, Netflix is in 1/3 of American households, whereas Amazon Prime is only used by 13% of American Households. Moreover, when looking at market shares, Netflix has a 37% market share. In contrast, services such as Youtube have only 17% and Amazon has 4% market share (Fortune).
This topic is worth discussing because it reflects the evolution of the television industry. From a time of massive tube televisions, to TV on multiple platforms, it is clear that the field has come a long way. Also, it is a reflection of the industry’s attempt to regain ground. TV Everywhere is the cable provider’s response over-the-top (OTT) Internet video providers like Hulu and Hulu Plus that are ultimately forcing a loss of revenue. In addition to this, TVE provides an answer to cord-cutting. Cord-cutting occurs when a customer “ends their relationship” with the cable company. In order to win back the customers lost, as well as obtain new customers, cable companies are joining forces in the TVE craze. According to Paul Levinson, author and Professor of Communication and Media Studies at Fordham University, “TV Everywhere is definitely the way this is all headed…this is the future of television” (Spangler, 2011). This type of technology is much needed for the industry’s survival in modern society. TVE has the potential to lead the way in transforming the way we perceive television overall. “TV Everywhere will serve as a catalyst for a migration to more IP-centric video delivery and, potentially, all-IP delivery in the long term (Faltesek, 2011).
Introduction Reed Hastings (co-founder) founded Netflix in 1997. During this time, Netflix offered DVD rentals by mail. As Netflix went public in 2002, shortly a year later their subscription reached the one million mark (Netflix Management, 2011). Recently, Netflix was recognized as one of the 50 most innovative companies, ranking number eight for “streaming itself into a $9 billion powerhouse (and crushing Blockbuster)” with 20 million subscribers (fastcompany.com, 2011). This success shows how Netflix embraced a business approach where their mission was to take the troublesome experience of everyday consumers and transform them into a business opportunity.
Reed Hastings, co-founder of Netflix headquartered in Los Gatos, CA, began the company’s operations in 1997 after receiving an enormous late charge from a movie rental he returned long overdue. However, Hastings had the desire to be different than traditional movie outlets; whereas, customers had to drive to the location, pay a certain amount for each movie they rented, and were given a deadline in which to return the movie. Instead of using a method established by other video markets “to attract customers to a retail location, Netflix offered home delivery of DVDs through the mail” which eventually led to a booming business towards streaming forms of entertainment (Shih, Kaufman, & Spinola, 2009, p. 3). Today, Netflix exists along with several competitors; however, offers the most streaming content available for viewing, and continues to grow its subscriber base both domestically and globally. Although, direct and indirect competitors, acquisition costs, and several barriers present a financial threat for Netflix, the company has managed to grow with the acclamation of partnerships, expand to international territories, and vastly increase its price in shares of stock.
The idea inspired Reed Hastings and Marc Randolph, and then they founded Netflix in Scotts Valley, California in 1997 (Netflix, 2014). The company comes into play by developing a subscription-based streaming platform for movies and television shows. Unlike the traditional movie rental businesses such as Blockbuster and Redbox, Netflix’s innovation offers service via Internet, and it does not have any physical stores but instead delivers DVDs through postal mail in the U.S. Since then, Netflix has become the world’s leading internet television network with constant growth of customers to over 48 millions members in more than 40 countries in the North America, Europe, and the Latin America (Netflix, 2014). In this analysis, the main focus is examining the current market environment for Netflix. It identifies the type of market structure that Netflix is currently competing. The analysis also expands on the competitions, product differentiation, pricing strategy, and measuring the level of easy entry-and-exit.
1) Netflix’s currently does not have a user-friendly method for customers to stream videos onto television sets. Netflix is entering agreements with the manufacturers of game systems, Blu-ray disc players, and televisions to include software capable of streaming Netflix videos. 2) There is strong competition with other companies that offer video streaming at no extra charge. Additionally, Netflix and its competitors are attempting to enter the digital world.