Acquisition Strategy

Analysis of Netflix in the Movie Rental Industry: Case 4

MGT 450

Dennis Lauer

July 18, 2011

Analysis of Netflix in the Movie Rental Industry

Since 2000, the introduction of new technologies and electronics products had rapidly multiplied consumer opportunities to view movies (Gamble, J & Thompson, A, 2011, p. 302). Currently with the innovation in technology, the movie industry has changed overtime. Movies are not only seen at theatres or on television but also on mobile devices, computers and game consoles. In this paper I will address the major problems and issues experienced by Netflix analyzed through the movie rental industry. My in-depth analysis report to management will go through the entire process of identifying, evaluating, and recommending areas of improvement for Netflix. I will carefully evaluate the organization's situation from the perspective of its competitiveness and performance prospects, and draw sound conclusions about what actions Netflix’s management needs to take as a result of the relevant circumstances.

Company History

With more than 23 million members in the United States and Canada, Netflix, Inc. is the world's leading Internet subscription service for enjoying movies and TV shows (Netflix, 2011). Reed Hastings founded Netflix in 1997 after selling his shares of his first company, Pure Software. The online movie rental was successful due to the rapidly increasing popularity of the Internet. In 1999, Hastings launched the online subscription service and attracted a base of more than 2 million subscribers in just four years (Gamble, J & Thompson, A, 2011, p. 306). For $7.99 a month, Netflix members can instantly watch unlimited movies and TV episodes streamed over the Internet to PCs, Macs and TVs. Netflix has a large variety of streaming devices such as Microsoft's Xbox 360, Nintendo's Wii and Sony's PS3 consoles; an array of Blu-ray disc players, Internet-connected TVs, home theater systems, digital video...