Netflix Case Study
The movie rental industry is a living industry; there are constant changes with advances in technology, rights management, and the slow, but steady, move away from physical Media. Companies such as Netflix, Hulu, RedBox, and Blockbuster are being forced to look at new business models and try to keep up with these changes.
1. How strong are the competitive forces in the movie rental marketplace? Do a ﬁve-forces analysis to support your answer.
Threat of New Competition: Netflix has almost zero threat of new competition. Any new competition would have to overcome large capital expenses to get started; these expenses include obtaining TV show and movie rights from the studios. Even if the starting …show more content…
5. What is Netﬂix’s strategy? Which of the ﬁve generic competitive strategies discussed in Chapter 5 most closely ﬁt the competitive approach that Netﬂix is taking? What type of competitive advantage is Netﬂix trying to achieve?
Netflix’s strategy best fits the Best-Cost provider strategy. Their goal is to offer the most instant streaming content at the cheapest price. They are trying to advertise their ever-growing library and compare it to smaller instant libraries such as Hulu or Amazon Prime Instant.
6. What does a SWOT analysis of Netﬂix reveal about the overall attractiveness of its situation?
Strong Market – capturing 75% of DVD rentals, and marketing itself as a household brand.
Economies of Scale – They have low operating costs while an ever-increasing subscription base.
Customer Services – Netflix offers personalized movie recommendations based on previous movies watched and movie ratings
Large Inventory – With over 100,000 titles on DVD and an ever-growing instant library, this makes Netflix a leader in video retail.
Effective Pricing – With multi-tiered plans, Netflix can have even greater profits through price discrimination.
Global Marketing – Netflix is just now starting to expand outside the United States.
Growth in Digital Distribution – Netflix is already set up for digital distribution, and