Netflix Case
Introduction: The rental movie industry has seen enormous changes over the past ten years. The industry has seen a rapid change from in store movie rentals to online movie rentals that has caused Blockbuster and Movie Gallery, the two largest in store movie rental companies in the United States, to file for bankruptcy and go out of business. This industry movement has allowed many online movie companies to emerge, most notably Netflix which is the world’s largest online subscription service of online movie rentals.
Background and History of Netflix:
Netflix was founded in 1997 in California as an online video rental and streaming company. Since launching its online movie rental service in 1999, Netflix has experienced rapid financial growth. Netflix’s net income grew approximately 40 percent annually from 2004 to 2009 while their top in store movie rental competitors, Blockbuster and Movie Gallery, experienced large decreases in sale which ultimately led to both companies filing for bankruptcy. In addition to excellent financial growth, Netflix has also experienced rapid subscriber growth with total number of subscribers increasing each year since 1999. Industry trends and Netflix’s excellent strategy to keep customers returning to use their site and also bringing new customers to the site has allowed Netflix to remain the industry leader they are today. However, rival companies such as Amazon have begun to enter the industry with large video rental libraries of their own.
Netflix’s Strategy: Since the introduction of Netflix’s online movie rental service in 1999, the company’s CEO and founder, Reed Hastings, mission has been to create the world’s best online movie provider and increase subscribers and earnings per share each year. He plans to do this by imposing a subscription-based business model and the use of a multi-pronged strategy to build a growing subscriber base. This business model allows for customers to choose from eight different
Background and History of Netflix:
Netflix was founded in 1997 in California as an online video rental and streaming company. Since launching its online movie rental service in 1999, Netflix has experienced rapid financial growth. Netflix’s net income grew approximately 40 percent annually from 2004 to 2009 while their top in store movie rental competitors, Blockbuster and Movie Gallery, experienced large decreases in sale which ultimately led to both companies filing for bankruptcy. In addition to excellent financial growth, Netflix has also experienced rapid subscriber growth with total number of subscribers increasing each year since 1999. Industry trends and Netflix’s excellent strategy to keep customers returning to use their site and also bringing new customers to the site has allowed Netflix to remain the industry leader they are today. However, rival companies such as Amazon have begun to enter the industry with large video rental libraries of their own.
Netflix’s Strategy: Since the introduction of Netflix’s online movie rental service in 1999, the company’s CEO and founder, Reed Hastings, mission has been to create the world’s best online movie provider and increase subscribers and earnings per share each year. He plans to do this by imposing a subscription-based business model and the use of a multi-pronged strategy to build a growing subscriber base. This business model allows for customers to choose from eight different