Cinematch studies past selections made by members, and begins to recommend titles that would likely be enjoyed by the customer based on previous selections. ? 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 intern keeps customers from canceling there subscription to the service.
In light of this challenging industry landscape the business strategies that the company has evolved will enable Netflix to ... ... middle of paper ... ...ITIES • Digital Distribution; s digital distribution of video content becomes an increasingly popular viewing format, Netflix strategically positioned to serve as a bridge during the slow transition from physical DVD formats to digital streaming. Netflix is better positioned for this role than other firms because they already have an E-Commerce business model and a brand name. • Partnerships and Profit Sharing Schemes; Partnerships with companies like Microsoft (Netflix compatible Xbox 360) allow Netflix to expand their subscription base and Netflix compatible streaming devices. Profit sharing schemes with studios allow Netflix to acquire exclusive distribution rights. Both new partnerships and profit sharing schemes should be sought to increase Netflix’s subscription base, profits, and establish themselves as the frontrunner in providing digital home entertainment.
The brand image of Netflix is the low price. VI. Conclusion and Recommendation In conclusion, the vast technology change opens many opportunities for Netflix to grow. By assessing the market environment and challenges, it enables Netflix to overcome the obstacles to remain as the market leader. To achieve the future growth, Netflix should implement both strategic and tactical approaches to compete with others.
As stated, it is a combination of their culture of high performance drivers and fosters the “freedom and responsibility” mindset (Elliott, 2010). Because of their innovation and gradual entry into the market, Netflix has the competitive advantage to add layers of products for growth for years to come. Currently, Netflix has the competitive advantage to increase price and retain their current customer base. Even more beneficial, is the opportunity to attract additional subscribers with their new features. To end this, combining their products, price, culture, and strategic plan makes Netflix innovative.
Its design and traffic management play key roles on its network infrastructure (The ISP Speed Index, 2014). The main strategy of Netflix is to attract more subscribes to the online video streaming service. Amazon, Blockbuster, Walmart, Redbox were some of the competitors of Netflix in movie rental. Netflix consumes about 29.7% of peak downstream traffic because of its online video streaming service. (Adhikari, et al., 2012).
Since most viewers subscribe to a handful of these competitors, and few have switching if a new competitor emerges with greater streaming capacity and lower prices, Netflix’s business model could be severely jeopardized. STRATEGIC OPTION The analysis of the company reveals that the performance of the company shall be improved and enhanced with the selection of the accurate and befitting strategic option. Netflix is the largest online movie rental service provider and offers a library of over 100,000 DVD titles, 12,000 of which can be streamed instantly online, to its ten million subscribers. Netflix’s DVD titles include movies, television, and other filmed entertainment products. Along with an extensive collection of titles, the Netflix service also includes access to movie ratings, reviews, and personalized movie recommendations.
Netflix incorporated is in the home video entertainment market and it is the world's largest online movie rental. “Netflix increases value to customers based on four major value drivers: technology, delivery, customization and brand reputation.” In recent year, the technology growth rapidly, Netflix incorporated finds the niche market in video rental market. They distributes the movies to consumers through movie theatres, airlines, hotels, and in-home. Gradually, Netflix changes the customers’ consumption habits on watch movies. More and more customers prefer to choice the convenient way rather than buy DVDs.
With the rise of YouTube and other video streaming sites, Netflix recognized that online video streaming would be the next innovation frontier and invested heavily in it. The result: As of October 2015, Netflix has 69.17 million subscribers with more than $5.50 billion dollar in revenue, 17 times more than how much blockbuster was sold for. Innovation made all the difference. Blockbuster was just one example. There are multiple other companies which failed due to lack of innovation.
Netflix also provides movie reviews written by Netflix editors, subscribers, and movie critics. In addition Netflix provides the average rating that other subscribers gave the title, and displays other titles that the subscriber might enjoy. Netflix has revenue sharing agreements with more than 67 studios and distributors, and also purchases titles directly from studios, distributors, and independent producers. The major competitors for Netflix are Movie Gallery, Trans World Entertainment, Blockbuster, and Intermix Media. Industry Trends Since 1999 the growth of spending on DVD purchases and rentals has been incredible.
Netflix lost over $11 million in 1998 and as a result significantly changed the business model in 2000. The new strategy included focusing on becoming a nationally based subscription model and focusing on enhancing the subscribers experience on their website. The change in strategic focus has allowed Netflix to grow into the largest online entertainment subscriptions service in the United States with over 6.3 million subscribers (Netflix). 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.