Netflix Case Study

Netflix Case Study Analysis Executive Summary: Netflix Inc. (Netflix) is currently the largest online provider of DVD rentals in the US. Founded by Reed Hastings in 1997, the company offers monthly prepaid rental services utilizing its online search engine, where the company then mails DVDs to subscribers via the United States Postal Service (USPS). Since the company’s inception, Hasting has been exploiting disruptive innovations as a means of creating a competitive advantage over incumbents within the industry. Netflix faces stiff competition within the movie rental industry that includes Blockbuster Video and traditional “mom and pop” video rental stores. Now, Netflix must develop a new strategy in response to the competitive moves and technology changes within the industry. Netflix is now contemplating new strategies so that it can compete with online video and Video-on-Demand (VOD) providers, as well as, Redbox, a movie rental provider, which delivers DVD’s through a system of strategically places kiosks. This case analysis will first start by identifying the factors that led to Netflix growth as well as weaknesses and risks that Netflix currently faces. Next, the case analysis will provide potential strategies for Netflix going forward. Finally, the analysis will provide recommendations on what strategy Netflix should take in order to improve its position going forward as it implements a video-on-demand service.

Situation Analysis: The recommendations proposed in this case study are based on five key elements: The environmental context, The Netflix Company (Company), USPS and Movie Studios (Collaborators), Netflix’s Customer base and Netflix’s Competitors. Context – In 1979 a Los Angles retail outlet is credited with the creation of the retail movie. The video rental industry boomed throughout the 1980’s and became a fixture in consumers’ spending during the 1990’s, grossing an average of $1 billion yearly. With the arrival of digital