Netflix Paper
Introduction Netflix is a DVD rental company which has been founded by Marc Randolph and Reed Hastings in 1997. When Netflix was first launched, it started by offering DVDs on a fee per use basis. In 1999, it introduced monthly subscription service and in January 2007, Netflix started offering on-demand video streaming over the internet. Since then, Netflix has enjoyed huge success to the point that it has become one of the largest online providers of movie rentals in U.S. Netflix has been able to fend competition from Blockbuster and Wal-Mart. The company is enjoying a strong reputation as an innovator in the home movie industry and it has been growing at a significant rate. From the third quarter of 2009 to the third quarter of 2010, the number of subscribers has increase by 52% and before Netflix was launched in Canada in September 2010, the firm already had approximately 16.9 million subscribers. However, Netflix is now facing a whole new set of adversaries including Google, Apple, Hulu, Flixter, Redbox and Amazon. Given these facts, how long will Netflix be able to sustain this growth and what are the strategies that should be implemented by the company to keep on growing? SWOT Analysis In order to identify the appropriate strategies that Netflix should implement to continue this growth, we need to consider the strengths, weaknesses, opportunities and threats of the firm.
Strengths | Weaknesses | * First-mover advantage * Low Overhead Cost – no stores * High Customer Satisfaction * World’s largest selection of DVDs * Reasonable Pricing * Good and Quick Service * Website * Networked Connection | * Service not suitable for old people * Sometimes DVDs can take too much time before reaching customers * Lack of control over DVDs return time * The DVDs can arrive scratched or broken through the mailing process. * Low selection for streaming * Trouble providing enough copies of new, popular movies. | Opportunities |
Strengths | Weaknesses | * First-mover advantage * Low Overhead Cost – no stores * High Customer Satisfaction * World’s largest selection of DVDs * Reasonable Pricing * Good and Quick Service * Website * Networked Connection | * Service not suitable for old people * Sometimes DVDs can take too much time before reaching customers * Lack of control over DVDs return time * The DVDs can arrive scratched or broken through the mailing process. * Low selection for streaming * Trouble providing enough copies of new, popular movies. | Opportunities |
References: 1. http://www.hackingnetflix.com/2010/10/netflix-q3-2010-results-169-million-subscribers-553-million-in-revenue.html 2. http://www.hackingnetflix.com/2010/09/ny-times-netflix-now-facing-new-set-of-competitors.html 3. http://www.theglobeandmail.com/news/technology/tech-news/netflix-confronting-canadian-challenges/article1866312/ 4. http://www.stanford.edu/~aditya86/Netflix.pdf 5. http://en.wikipedia.org/wiki/Netflix 6. http://www.netflix.com/MediaCenter?id=5384 7. http://www.marketingprofs.com/print.asp?source=/6/cooktaylor1.asp