Netflix Case Study Analysis
Netflix Case Study Analysis
“Creativity is thinking up new things. Innovation is doing new things.”
— Theodore Levitt
The importance of this quote comes alive after reading the first three sentences within this case study. A statement by Reed Hastings, the founder and CEO of Netflix. “Well let’s separate the market into two phases. One is the phase of DVD, which peaks in five to 10 years and last for 20 to 30 years. Then there is the phase of Internet delivery, which peaks 20 or 30 years from now and lasts for 100 years” (Cengage). From the time Hastings founded Netflix in 1997, with his initial online DVD rental business idea, there has been many factors altering the business strategy of the company within it’s internal and external environment that has allowed Netflix to grow to where it is today. Netflix took of quickly and had already achieved economies of scale in as early as 2000, which coincidently was the same year they shifted their goal from DVD rentals to streaming video. From then, Hastings knew that within time DVD’s would be a thing of the past, and online instant streaming was a thing of the future. He has been creative enough to be able to gain sustainable competitive advantage with other competitors, but more importantly he has been innovative enough to stay competitive with our society’s rapidly changing expectations for technology, which is a large barrier to this industry. Society’s rising demand for instant Internet streaming is causing their demand for DVD’s to decrease. Therefore, it seems as though DVD rentals are starting to fall from its peak and in return instant Internet streaming is starting to climb to the very beginning of its peak. Throughout this report the focus will stay on Netflix’s external environment, internal environment, current strategy, and future recommendations that keep Netflix “an e-commerce success story in an ever-changing business landscape” thanks to their early start in the subscription DVD rental
“Creativity is thinking up new things. Innovation is doing new things.”
— Theodore Levitt
The importance of this quote comes alive after reading the first three sentences within this case study. A statement by Reed Hastings, the founder and CEO of Netflix. “Well let’s separate the market into two phases. One is the phase of DVD, which peaks in five to 10 years and last for 20 to 30 years. Then there is the phase of Internet delivery, which peaks 20 or 30 years from now and lasts for 100 years” (Cengage). From the time Hastings founded Netflix in 1997, with his initial online DVD rental business idea, there has been many factors altering the business strategy of the company within it’s internal and external environment that has allowed Netflix to grow to where it is today. Netflix took of quickly and had already achieved economies of scale in as early as 2000, which coincidently was the same year they shifted their goal from DVD rentals to streaming video. From then, Hastings knew that within time DVD’s would be a thing of the past, and online instant streaming was a thing of the future. He has been creative enough to be able to gain sustainable competitive advantage with other competitors, but more importantly he has been innovative enough to stay competitive with our society’s rapidly changing expectations for technology, which is a large barrier to this industry. Society’s rising demand for instant Internet streaming is causing their demand for DVD’s to decrease. Therefore, it seems as though DVD rentals are starting to fall from its peak and in return instant Internet streaming is starting to climb to the very beginning of its peak. Throughout this report the focus will stay on Netflix’s external environment, internal environment, current strategy, and future recommendations that keep Netflix “an e-commerce success story in an ever-changing business landscape” thanks to their early start in the subscription DVD rental
Cited: Farfan, Barbra. "NetFlix Movie Rentals Mission Statement - A Vision, A Promise and Nine Values." About.com Retail Industry. N.p., 2013. Web. 21 Oct. 2013. . Roettgers, Janko. "The Slow but Inevitable Decline of Netflix 's DVD Business — Tech News and Analysis." GigaOM. N.p., 21 Oct. 2013. Web. 21 Oct. 2013. . Toor, Amar. "Netflix Has Likely Overtaken HBO in Paid US Subscribers, Analysts Say." The Verge. N.p., 21 Oct. 2013. Web. 21 Oct. 2013. . Welch, Chris. "Netflix Innovation VP Says Bonus Content and Extras May Come to Original Shows." The Verge. N.p., 17 Oct. 2013. Web. 21 Oct. 2013. .