Netflix, Inc. Case Study

Netflix, Inc. is the world's leading Internet subscription-based DVD rental service and video-on-demand (VOD), which offer customers the ability to enjoy movies and TV shows through their computers and other electronic devices. Reed Hasting founded the company in 1997, as an alternative way to provide a home movie service that would better satisfy customers (Economy of Scale).

Netflix's business model identifies with the following characteristics that appeal to movie fanatics: value, convenience and selection. As a web-based DVD rental business, Netflix delivers unique value to customers by providing a vast selection of films, next-day delivery and unlimited subscriptions (Capacity Utilization, Economy of Scale, Time Management).

Today Netflix is the fastest growing online industry for DVD movie rentals and video streaming. While profitable, the company positions itself ahead of competitors such as Blockbuster, Vongo, CinemaNow and Hulu. Netflix is continuously expanding by providing value and convenience to its members. The company leads the online video market with over 20 million subscribers (Capacity Utilization, Differentiation).

VALUE

Netflix emerged from an alternative DVD rental company to become a leader in the home video market offering a distinctive customer service experience to movie enthusiasts. As the pioneer of online DVD rentals, Netflix through the years has made innovation the centerpiece of their growth strategy. From DVD by mail to video streaming, Netflix has continuously changed their business model to meet the rapid technological changes and to stay ahead of its main competitor Blockbuster. After introducing the online streaming capability, Netflix becomes the world's leading Internet subscription service for enjoying movies and TV shows. The company had developed marketing and innovative strategies such as the recommendation system and the inventory management to stimulate demand hence creates more value, higher capacity of utilization and better profit margin (Capacity Utilization, Learning Curve, Integration).

Value to Customers:

• Unlimited monthly rentals (Netflix's "all you can eat" model)

• Value and Selection:

Online streaming TV shows and Movies

Broad range of movie titles: Over 70,000 titles and 55 million DVDs to choose

from (Economy of Scale, Capacity of Utilization)

• Convenience/Accessibility/Availability: Customers have the choice of multiple media types and over 700 formats:(Integration, Capacity Utilization, Economy of Scale)

DVD by mail

Streaming