Netflix
Case Study:
SWOT Analysis of Netflix
By: Ashley Avallone
Executive Summary
Netflix started as an online based movie rental service in 1999 when it was created by founder Reed Hastings, the current CEO of the company. Hastings’ goal for the company was to be “the world’s best Internet movie service provider and to deliver a growing subscriber base and earnings per share every year” (Thompson, C-92). The company has been able to become a leader in the movie rental and streaming industry for several reasons. Netflix was an early entrant to the industry and has been able to build an extensive subscriber base due to aggressive promoting and advertising of the brand, exclusive contracts with movie suppliers, and their superior customer service and knowledge.
Netflix has used a subscription based model that has proved lucrative for the firm. Subscribers can choose from eight unlimited plans at various price points so they are within their budget. The company targets three main customers; those interested in the convenience of home delivery, bargain hunters, and movie enthusiasts. By knowing their target clientele, Netflix has been able to create and effectively deliver their services to become an industry leader. The company became public in 2002 and since then its revenue rose to an 2.6 billion dollars in 2012 (Statista RRS). Stock prices for the company from the early 2000s can be seen in Appendix A. This chart shows that the company has enjoyed positive growth and its earnings per share peaked in 2011. However, since then the company has faced unrelenting competition as well as internal mistakes that have caused the once untouchable firm to falter. The following report looks into several aspects Netflix as well as the industry as a whole in order to understand what must be done in order for Netflix to maintain its status as a leader of the industry.
Introduction Originally, the money in the movie distribution business was
SWOT Analysis of Netflix
By: Ashley Avallone
Executive Summary
Netflix started as an online based movie rental service in 1999 when it was created by founder Reed Hastings, the current CEO of the company. Hastings’ goal for the company was to be “the world’s best Internet movie service provider and to deliver a growing subscriber base and earnings per share every year” (Thompson, C-92). The company has been able to become a leader in the movie rental and streaming industry for several reasons. Netflix was an early entrant to the industry and has been able to build an extensive subscriber base due to aggressive promoting and advertising of the brand, exclusive contracts with movie suppliers, and their superior customer service and knowledge.
Netflix has used a subscription based model that has proved lucrative for the firm. Subscribers can choose from eight unlimited plans at various price points so they are within their budget. The company targets three main customers; those interested in the convenience of home delivery, bargain hunters, and movie enthusiasts. By knowing their target clientele, Netflix has been able to create and effectively deliver their services to become an industry leader. The company became public in 2002 and since then its revenue rose to an 2.6 billion dollars in 2012 (Statista RRS). Stock prices for the company from the early 2000s can be seen in Appendix A. This chart shows that the company has enjoyed positive growth and its earnings per share peaked in 2011. However, since then the company has faced unrelenting competition as well as internal mistakes that have caused the once untouchable firm to falter. The following report looks into several aspects Netflix as well as the industry as a whole in order to understand what must be done in order for Netflix to maintain its status as a leader of the industry.
Introduction Originally, the money in the movie distribution business was
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