Netflix Case Study
Executive Summary
VODISNOWHERE. What do you see from the block of letters? Is it “VOD IS NOWHERE” or “VOD IS NOW HERE”? You are right if you guess the former and latter. That depicts the fast pace of technological development. VOD, which refers to Video-on-Demand, is the recent video streaming technology where pay-per-view programming merges with Internet downloading. Netflix, an online subscription-based DVD rental company, entered the video industry with disruptive technology of offering online video rental while the incumbent competitors like Blockbuster were offering retail rentals. The incumbent competitors eventually followed Netflix’s direction when their core competencies were sabotaged by Netflix’s strategy. Moreover, Netflix was a technological leader that invested in new technologies like VOD.
In this case study, we first address the pertinent problem faced by Netflix which is arriving at a decision regarding the optimal mode of entry into the VOD market. This decision in question will inevitably impact Netflix’s current position in the DVD rental industry as well as its existing business model and thus a thorough analysis of the corporation and the video market need to be made.
A SWOT analysis was done on Netflix and its strengths and weaknesses, in particular view reveal its survival in the hyper competition of video industry where dynamic and complex uncertainties render competitive advantages not sustainable. Some strengths of Netflix’s current business model include its no late fee subscription model and proprietary recommendation system where customers can be recommended movies based on their preferences as well as the availability of the movies. The main weakness of Netflix remains to be delivery time as customers do not get to enjoy the instantaneous effect of receiving the DVD upon rental as compared to a brick and mortar store. The opportunities which Netflix could capitalize include leveraging on existing strengths such as, its
VODISNOWHERE. What do you see from the block of letters? Is it “VOD IS NOWHERE” or “VOD IS NOW HERE”? You are right if you guess the former and latter. That depicts the fast pace of technological development. VOD, which refers to Video-on-Demand, is the recent video streaming technology where pay-per-view programming merges with Internet downloading. Netflix, an online subscription-based DVD rental company, entered the video industry with disruptive technology of offering online video rental while the incumbent competitors like Blockbuster were offering retail rentals. The incumbent competitors eventually followed Netflix’s direction when their core competencies were sabotaged by Netflix’s strategy. Moreover, Netflix was a technological leader that invested in new technologies like VOD.
In this case study, we first address the pertinent problem faced by Netflix which is arriving at a decision regarding the optimal mode of entry into the VOD market. This decision in question will inevitably impact Netflix’s current position in the DVD rental industry as well as its existing business model and thus a thorough analysis of the corporation and the video market need to be made.
A SWOT analysis was done on Netflix and its strengths and weaknesses, in particular view reveal its survival in the hyper competition of video industry where dynamic and complex uncertainties render competitive advantages not sustainable. Some strengths of Netflix’s current business model include its no late fee subscription model and proprietary recommendation system where customers can be recommended movies based on their preferences as well as the availability of the movies. The main weakness of Netflix remains to be delivery time as customers do not get to enjoy the instantaneous effect of receiving the DVD upon rental as compared to a brick and mortar store. The opportunities which Netflix could capitalize include leveraging on existing strengths such as, its