Essay on Netflix Case Study

Submitted By acornay
Words: 1899
Pages: 8

Netflix is considered one of the top leaders in the DVD rental/ streaming industry, and there are many reasons why. This case analysis will go over some of the strengths of Netflix, some of the downfalls of the company, and what makes them who they are today. Netflix has many competitors in the industry, and they are now in a constant struggle to stay atop of the leader board as online streaming becomes more popular.

There are many entrants in the market today, and one of the things consumers look for in a company they choose to indulge in is accessibility by technology. Consumers are constantly looking for ways to learn about their companies and the simplicity of ordering a service from an online source. As a result of technological advancement in the past few years, movie industry has received positive enhancements whereby the movies production and distribution techniques have received a great boost. Movie rental companies such as Blockbusters and Netflix are able to distribute streaming movies to their clients who subscribe for monthly access of the companies list of movies by paying a monthly subscription fee which is affordable depending on the number of movies they wish to watch. Firms in the growing online DVD rental industry have to keep up with constant changes in technology. With technology at an all-time high, it is paramount to have a mobile friendly application to retain as much business as possible. Switching over from hard copy DVDs to online streaming is going to be crucial to any successful business in this industry. Having compared other companies to Netflix, they all offer similar perks to their customers. They each have a website, a mobile site, and application that allow consumers to quickly look up DVDs that interest its customer based on past rentals. Not keeping up with technology can be the easiest way to lose business. Consumers constantly use the social media to see who has the best deals when it comes to getting a service such as Netflix. There are many social media sites, such as Amazon and Facebook, which allow companies to offer discounted monthly subscriptions, customer service, and promotions when they buy a product from such website. Following the trends not only helps with retention from customers, but also in growing profits from around the company.

Online DVD rentals and streaming is a very popular commodity that appeals to a large demographic of Americans who say movies are an essential part of their life routine. Demographic trends such as increased world population present opportunities to Netflix and other competitors. Tapping into the foreign online markets in China and India will hold significant value in whichever company reaches out first. Netflix could tap into these markets; however, the firm must consider the cost to expand, prepare for barriers to entry across borders, as well as learn the nuances of negotiating agreements with foreign film studios. With the population steadily rising, it is increasing the number of customers who want to watch movies. One of the current problems is that companies are losing money from hard copy DVD sales. Customers now have the opportunity to stream movies from their blu-ray players and video game consoles. “Internet video alone will account for 57 percent of all consumer internet traffic in 2014”.

The Diffusion Group, a market research company, projects revenue from internet video to TV to grow from $1 billion in 2009 to $5.7 billion in 2014. In late April 2010, Netflix had grown its subscriber base by 35 percent. Within the same period, revenue grew by 25 percent to $493.7 million and net income by 44 percent to $32.3 million. Blockbuster is currently being hit hard by companies such as Netflix, Redbox, Hulu and many more. Blockbuster currently carries $1 billion in debt having to shut down 20 percent of its stores. The increase in profits from Netflix is related to consumer