Netflix Essay

1258 words 6 pages
The business model for Blockbuster and the one for Netflix have many variations. Blockbuster was solely a “brick-and-mortar” company having no online affiliations. It made its money mostly from continuously providing customers with new movie releases to rent. Building thousands of Blockbusters countrywide also helped lead to the company’s success, for by doing so, customers were provided with the convenience of location. Both Blockbusters late fee system, which guaranteed the timely return of rented movies, and its policy of selling the already viewed films, contributed to the company’s value. Netflix, although also based solely on renting movies, was purely online unlike Blockbuster. Its business model revolved around three main criteria …show more content…
This is true especially as more and more people gain access to the internet. The added convenience, efficiency, accessibility, broad reach, personalization, user-friendly interface, reasonable pricing, vast selection of movies, and recommendation system are all made possible due to Netflix’s investment in IT.
Most of these advantages provided by Netflix’s IT are sustainable. Its lower operation costs, as compared to a “brick-and-mortar” retailer, such as Blockbuster, contribute to its ability to provide service at a lower price. Customers will typically bend over backwards for a lower price. Its infrastructure and methods of engaging customers are tough for other companies to compete with. This is especially true for its recommendation service. This provides every customer with their own unique set of movies based on previous user feedback and selection of movies. Stores like Blockbuster do not have this service and so the only thing customers can go by when looking for similar movies is genre, a very inconvenient method. However, its previous business model of focusing primarily on renting out DVDs is not sustainable. This is especially true as streaming movies is becoming more and more popular. Netflix was able to solve this problem by converting to a streaming service. They did so at a point in time when streaming was not nearly as popular as today, enabling them to get a head start on the market and acquire reasonable pricing from companies that

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