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Netflix industry competitive structure
Netflix strategic position in industry
Netflix strategic management
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Recommended: Netflix industry competitive structure
S.W.O.T. Analysis
Strengths:
? Netflix provides a subscription-style e-commerce service. Over 95% of customers pay at least $17.99 a month which includes unlimited rentals with up to three titles at a time. A comparably low monthly fee, allows Netflix to lead market share of online DVD rentals while competing with traditional brick and mortar rental stores. Meanwhile, Netflix might keep the customers who try the service and happy with it continue paying the monthly fee. Therefore, Netflix has fewer problems in predicting revenues.
? Netflix enjoys lower fixed costs due to the fact that it is an online DVD rental company. As an internet business, Netflix incurs less overhead costs than competitors such as Blockbuster, as well as having fewer employees to operate the physical locations, thus labor costs are greatly reduced.
? Netflix gives customers unlimited access to the largest selection of DVD?s. Netflix?s video library consists of over 45,000 titles, making their selection the worlds largest, beating out Blockbuster, Movie Gallery, and Hollywood Video.
? With over 35 distribution centers across the United States, Netflix has the fastest delivery time of any online DVD rental company. Through the use of the United States Postal Service over 90% of DVD?s are received by customers within one day of ordering.
? Netflix?s easy to use website allows customers to browse the video library by category such as action, romance, drama (sixteen total categories) or by using a comprehensive internal search of the library.
? Netflix uses the technology of Cinematch to give customers even better service. 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. 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 renta...
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...fering similar services, either directly or as a partnership with another organization.
§ Emerging competition from digital cable and satellite companies that offer movies on demand. Time Warner digital cable offers video on demand library consisting of a few hundred selections and growing. Users can purchase a movie with the touch of a button for about $4.00. Customers have access to the movie for up to 24hours. Many video on demand services are now offering technologies that allow users to pause, fast forward and rewind the movies they purchase. Though the selection offered by cable companies is extremely small in comparison to Netflix, it will only be a matter of time before the number of selections will increase drastically.
§ There are a large number of substitute products. Netflix is in the business of providing personal entertainment at an affordable cost. Since any other form of entertainment is considered a substitute, Netflix?s industry is in direct competition with all other forms of entertainment, whether it be reading, physical exercise, regular television, etc. If trends in popular culture move away from those related to movies, revenues may be affected.
Because Netflix can be known for swapping out its roster, be sure to check out these standouts before the streaming company switches it
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.
[1] Halal, Bill. "How NetFlix Beat Blockbuster: An Exemplar of Emerging Technologies." William E Halal RSS. N.p., n.d. Web. 09 Dec. 2013.
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.
Companies like Netflix that have been in the movie streaming industry for many years, and have a large portion of the market for streaming movies make it difficult to others to enter into the online movie rental industry. Netflix has already established a large library of movies and TV shows available for its members. It would take Redbox a number of years and resources in order to catch up with the infrastructure that Netflix already has available and ready for the consumer right now. Redbox would need to analize the opportunity cost of going into a new market or staying and investing in the current kiosks market and making sure that it is the best it can be. Redbox may be subject to others entering into the kiosks market to tap in on a low cost profitable business model. Blockbuster announced the intentions of entering into the kiosks market, which would have taken some of Redbox's share of the profits in a small percentage. However, in 2012 Redbox purchased Blockbuster kiosks business. According to LA times:
... 30 year veteran journalist, producer, then a president of CBS News and now the chairperson and CEO of Sony Corporation of America, had this to say about the future of movies, "I think domestically, it's video on demand. There will be huge audiences for movies that people want to see when they want to see them. And they'll be able to download them on a multitude of devices at convenient moments in convenient places. And that's got to change the nature of viewing.” The world listens when business giants like Stringer make such statements, and it sounds like the home theater experience will only become even more convenient and desirable.
The twenty year journey of Blockbuster has not been without bumps, valleys, road blocks, and detours. Blockbuster has come under legal fire from Netflix, a major online competitor, the Free Trade Commission for attempting a host...
It can be difficult to re-create the experience of going to the movie theater. However, home theaters and in-home entertainment has become more popular as online streaming has taken a precedence in the industry.
The best part for the consumer is that similar to Netflix, you can engage in a free 2 month trial before you commit to a monthly subscription. This helps consumers continue to evaluate in order to make sure this is the best service to satisfy their need. Also, subscriptions are monthly and can be cancelled at any
Although Hastings vowed to be divergent from other video retailers, his goal was to use an identical pricing strategy; however, one that would “appeal to customers [. . .] who used online shopping as an alternative to traveling to retail outlets” due to ease of access and more preferences (Shih, Kaufman, & Spinola, 2009, p. 3). Furthermore, Netflix launched its business at a time DVDs had barely hit the marketplace as the firm anticipated the new technology to be a promising venture. Nonetheless, within a year DVD players became so vast...
A movie theater has its advantages and disadvantages. One advantage is that people can see the showing of different movies that have been newly released. The disadvantage is that, that is all there is to it and nothing more. At home, you can control the variety and ways to watch a movie. People buy many movies to watch at home and it can be anything at any time even at any place. The only bad thing about it is that they cannot see any of the newest released movies that recently came out in theaters. There are two types of ways people watch movies at their homes. One way is people already own DVDs or have bought many of them and start watching them in their DVD players. The other ways are streaming a movie through the internet. For this to happen, people would mainly buy the monthly subscriptions such as Netflix, Hulu, or Amazon Prime. Through this subscription people do not only watch movies in their homes but they also watch television shows. The only downside is there is a very limited number of movies added onto these
Low pricing has been Netflix competitive advantage since the beginning. The brand image of Netflix is the low price.
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. Digitally offering television shows is an area of competition that has previously been controlled by
Netflix was established by Marc Randolph and Reed Hastings in 1997 in California. Initially, the company offered a DVD-by-mail service for a monthly, flat rate subscription fee. Videos were sen...
Netflix and movie theaters each have their advantages, but when it comes to the four factors discussed Netflix is the clear winner. Netflix has a larger variety for a better price, while being convenient for the viewer. While