Netflix Case

1629 words 7 pages
Davor Rameša k0956979 Netflix case Executive summary What is Netflix’s strategy in the on-line movie rental market? What are Netflix’s sources of competitive advantage? Identify the competences key to the success of Netflix’s strategy and explain why. Netflix was a late entrant to the movie rental market and it was a first mover in the on – line movie rental market. Netflix’s strategy in the movie rental market is differentiation from traditional movie rental stores. Instead of attracting customers to a retail location, Netflix offered home delivery of DVDs through the mail. Why only DVDs? In 1998, most available movies were in VHS cassette format but Netflix concentrated on using only DVDs because its …show more content…
Blockbuster doesn’t have a recommendation system like Netflix. It only has an employee that can recommend movies to a customer. Netflix has advantage here since it can recommend a movie accordingly to the taste of each customer. New movies are available pretty much the same for both companies. Late fees – in 2005. Blockubuster decided to abolish late fees which gave them an advantage over Netflix, increasing customer satisfaction but also gave them significant costs: 60 milion $ marketing + 600 million dollar of revenue loss. What challenges and opportunities does Netflix face? What are the major risks? Major challenge for Netflix’s online DVD rental business is VOD (video on demand).VOD offers additional value to the customer – no waiting period, since it uses streaming technology to provide customers a movie with no waiting period. This is also an opportunity for Netflix since it has the possibility to implement this new technology into its core business but there are several cons of doing so. First issue is that this feature would cannibalize the core business because Netflix would replace stream of positive cash flows with another. Also Netflix found no way to differentiate itself against competitors like MovieLink and Vongo. Another major risks or challenges for Netflix are cable and satellite providers which offer pay-per-view system, providing HD on demand. For

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