Netflex Paper

Submitted By Chris174
Words: 2963
Pages: 12

BUS510 Management of Information Technology
Winter Term 2013

Individual Paper
The Analysis of Netflix

Yi Xie

Prepared for: Dr. Y.K.Mortagy ‘Ben’
March 1, 2013

Content
Introduction………………………………………………………….......................2
Background Information…………………………………...................................2 Services…………………………………………………….................................2
Porter’s 5 Forces Model Analysis ………………………………….........................3 Rivalry among Existing Firms…………………………………..........................4 Threat of New Entrants…………………………………......................................5 Threat of Substitute Products………………………….........................................5 Determinants of Buyer Power…………………………………...........................6 Determinants of Supplier Power………………………………….......................7. How Netflix use Porter’s 5 Forces model identify IT opportunities? ……........8
Techniques/Applications used by Netflix ………………………..............................8 Recommender and Ranking system………………………...................................8 Data Used by Netflix………………………........................................................10
Models used by Netflix……......................................................................................11
Present Situation........................................................................................................11
Conclusion……………………….............................................................................13
Recommendation………………………...................................................................13
Reference……………………………………………...............................................15

Introduction
Background Information
Netflix is an online subscription-based DVD rental service company available in the U.S. and a couple of European countries such as Sweden, Denmark, and Norway etc. The company is founded by Marc Randolph and Reed Hastings in Scotts Valley, California in 1997. Netflix open its website on April 14, 1998 and the employees in Netflix works in a tradition, online pay-per-rental model. Customers need to pay 4 dollars per rental plus 2 dollars for the postage. In 2000, the company used the new model of flat-fee unlimited rentals without due dates, late fees and shipping fees. The new model attracted a lot of customers for the company, after that, the company gradually becomes popular.
Now Netflix has 27.1 million subscribers in the United States and over 30 million worldwide. The total digital revenue for Netflix was $945 reported in January 2013(Wiki 2013).
Services
Disc rental
In the U.S. Netflix offers a monthly flat-fee service for DVD rental. The movies selected by subscribers delivered individually from the post office. The difference between Netflix and other DVD rental companies is that subscribers of Netflix can keep their DVD as long as they want. No late fee charges. But if there has a amount limit on the DVD subscribers can hold, once they want to rent a new movie, they need to mail the one they rented before back.

Internet video streaming
Netflix also offers Internet video streaming to computers, tablets and smart phone devices etc. Subscribers pay 7.99 dollars every month and they can watch the movies listed on Netflix website instantly. Subscribers can also use their game counselors like PS3 and XBOX watch the movies. In 2011, Netflix becomes to be the biggest source of North American web traffic. (Sandvine, 2011) According to the survey, 42% of the users use computer to watch Netflix’s films, 25% use Wii to watch, 14% use their laptop connect a TV watch , 13% use PS3 and 12% use Xbox 360 (Nielsen, July 2011)

Overall, Netflix is a very successful subscription-based DVD rental company today. The company owns a lot of market share. Their business model is unique than others and they use IT as an important tool to expand and improve their business. Also, they provide a unique…