This case study analyses the case of Netflix Company. This is an online DVD movie rental company. It offers innovative products and services concerning the entertainment sector and, more particularly, the movie sector. Netflix Company is considered to be a successful company. However, it will be facing stronger competition in the near future, both from direct competitors that offer all will offer identical products and services, and from indirect competitors that offer substitutive products and services through new technologies, both ethical and unethical.
Therefore, the point of this case study analysis is to identify and evaluate current Netflix Company’s position and strategy, comment about the future concerning the increasing (direct and indirect) competition in the context of analyzing external and internal company’s environment and make any useful recommendations. 1. Company Profile Netflix was based is Los Gatos, California. Reed Hastings, current CEO, and colleagues formed Netflix in 1997 and launched the subscription service in 1999 (Thompson et al, (2005) Case 2: Netflix).
It belongs to AMEX Internet concerning its stock index membership, as a company of service sector and recreational activities industry, according to NYSE listing (http://finance. yahoo. com/q/pr? s=NFLX). Being the world’s largest online DVD rental service, it had a library
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) offering more than three million members (since launching its subscription service in 1999, Netflix reached one million subscribers faster than industry giant AOL. ) access to this library (http://www. netflix. com). Figure 1. 1: Netflix’ front website, www. netflix. com Their appeal and success are considered to be built on providing the most expansive selection of DVDs; an easy way to choose movies; and fast, free delivery. Concerning the company’s service profile, for $17. 99 a month, Netflix subscribers can rent as many DVDs as they want, with three movies out at a time. There are no due dates and no late fees.
Netflix provides subscribers extensive information about DVD movies, including critic reviews, member reviews, online trailers, ratings and personalized movie recommendations. DVDs are delivered directly to the member’s address by first-class mail – with a postage-paid return envelope – from shipping centres throughout the United States. More particularly, the company operates more than 30 shipping centres located throughout the United States. It reaches nearly 90 percent of subscribers with generally one-day delivery. On average, Netflix ships more than 4 million DVDs per week.
Their proprietary Cinematch technology personalizes recommendations based on customer’s tastes and preferences and allows them to promote smaller, high-quality films to customers who otherwise might miss them (Thompson et al, (2005) Case 2: Netflix). Netflix subscirbers who rate movies will receive unique and personal movie recommendations every time they visit the Netflix website. These personalized recommendations are based on a member’s individual likes and dislikes (determined by their movie ratings and rental history). The recommendations allow members to discover great new films they may not have otherwise considered watching.