Netflix Strategic Analysis Essay

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Pages: 9

Netflix | Strategic Analysis (Nov 2007) | | Netflix, the online subscription-based DVD rental service aimed to better satisfy customer in a way competitors didn’t, customized and personalized service with unlimited monthly rentals from a great variety of film offerings. Now they want to leverage their strengths to enter into the Video on Demand market | | | 9/18/2009 | |


Table of Contents
1. Netflix Strategic Analysis
2. Netflix vs. Blockbuster: Comparative assessment of strategic differences
3. Netflix Competitive Advantage
3.1 Home video industry - Positioning Perspective
3.2 VRIO Perspective
4. Video On Demand (VOD) – Strategic Advantage


1. Netflix Strategic Analysis
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Also retaliation could be expected from larger players if the new business poses a threat. For a possible entrant, high differentiation (for example convenience or diversity) would be necessary to be able to succeed. The threat of entry would be considered medium to low, but Netflix saw the opportunity to get into the industry by highly differentiating themselves to be able to compete.
Threat of Substitution: Alternatives to the home video industry would be: first, movie theaters, expensive and lack the convenience of watching the movie in the comfort of the house. Second, to watch a movie through commercial television, it takes longer time to be available and is interrupted by commercials. Third, to watch movies through the internet, on the computer; it may be convenient, but not comfortable. Also, a customer always has as an option not to spend their free time watching movies. The substitutes are weak until technology allows for easy, quick and cheap movies to be downloaded through the internet and transfer to the TV. The threat of substitution is low.
The power of buyers: The source of dissatisfaction of customers comes from the narrow selection of movies and the rental due dates resulting in late fees. It becomes expensive for those who are volume customers and have to pay large amounts of money. But buyers have low switching cost as there are several options for renting movies, despite this fact, individual customers do not hold bargaining power over