Netflix Situation Analysis Essay Example
Anthony Morelle, Meghan Moran, Jose Velez Borbon, Melissa Greco Lopes
Marketing Communication Page 1
Netflix Marketing Plan
Industry Analysis
There have been many changes in the ways people view movies. Since the invention of the VCR, people have been going to a store to rent the latest movie release or view a classic. Now with the advent of the Internet, people have many different media to view a movie. They can download from a website, view in a video player, or stream the video from a vendor’s website. This was made possible because of Netflix. Netflix pioneered the way people rent movies. The company introduced low monthly rental fees instead of daily rental fees. There were no penalties for late movies because there were no stores to return the movies to. Instead, Netflix came up with the idea of allowing a customer to choose from a list of movies online, the movies are mailed to them within 1 business day, and could be returned the next day for another movie on the customer’s list complete with a self-addressed envelope with the postage paid. The only thing the customer had to do was drop it in the mailbox. Then in 1-3 business days, another movie from the list was delivered. As long as your subscription to Netflix is current, a customer can enjoy as many movies in a month at the cost of one DVD. This concept proved to be the death-knell for “mom-and-pop” video stores that require a customer to walk in and make a selection. It also caused traditional movie rental companies like Blockbuster to rethink its position within the industry as the leader. Netflix has no storefront, no employees to fill stores, no retail space to pay for. It could offer customers the ability to rent movies without the hassle of going to a store and do so with very little cost to the customer. New technology has also made competition fierce within this market segment. “New technologies and products, including online video, DVR, VOD, broadband, and video subscription
Marketing Communication Page 1
Netflix Marketing Plan
Industry Analysis
There have been many changes in the ways people view movies. Since the invention of the VCR, people have been going to a store to rent the latest movie release or view a classic. Now with the advent of the Internet, people have many different media to view a movie. They can download from a website, view in a video player, or stream the video from a vendor’s website. This was made possible because of Netflix. Netflix pioneered the way people rent movies. The company introduced low monthly rental fees instead of daily rental fees. There were no penalties for late movies because there were no stores to return the movies to. Instead, Netflix came up with the idea of allowing a customer to choose from a list of movies online, the movies are mailed to them within 1 business day, and could be returned the next day for another movie on the customer’s list complete with a self-addressed envelope with the postage paid. The only thing the customer had to do was drop it in the mailbox. Then in 1-3 business days, another movie from the list was delivered. As long as your subscription to Netflix is current, a customer can enjoy as many movies in a month at the cost of one DVD. This concept proved to be the death-knell for “mom-and-pop” video stores that require a customer to walk in and make a selection. It also caused traditional movie rental companies like Blockbuster to rethink its position within the industry as the leader. Netflix has no storefront, no employees to fill stores, no retail space to pay for. It could offer customers the ability to rent movies without the hassle of going to a store and do so with very little cost to the customer. New technology has also made competition fierce within this market segment. “New technologies and products, including online video, DVR, VOD, broadband, and video subscription