Netflix

Netflix Analysis

Industry Analysis

Being the first company to enter the online DVD rental market, Netflix has been able to attract quite a following. Though their major competitor, Blockbuster, is somewhat a household name, its delayed entrance into the online market has really put them at a disadvantage in competing with Netflix. However, in order to specifically analyze the online DVD rental industry, we consider the Porter’s Competitive Forces Model (Appendix 1). One of the major forces for Netflix is its rivalry. Blockbuster has recently lowered its prices to match the Netflix plans. Because of this, Netflix needs to build a plan of action that differentiates its product above and beyond price. With that understanding, the company will have to prove customers that Netflix is more beneficial than its major competitor, Blockbuster. Netflix’s buyers are another key force to analyze. Since Netflix provides service directly to subscribers, these customers have the ability to put the firm under pressure. Customers are sensitive to price change, so a plan involving an increase in price, even for a short period of time, should not be considered. Additionally, an important aspect for Netflix is the amount of information they have on their buyers. Through consumer profiles and Netflix blogs, the company understands a consumer’s desire to always be in the know.

External Analysis

Netflix has continued to prosper in an incredibly fast-paced industry, still with so much room for growth (Appendix 2). With more than two-thirds of all households now owning a DVD player, Netflix caters to all different demographic groups across the United States. They have even reached a younger generation by syncing with the XBox Live gaming system. Unfortunately, there are some factors that keep Netflix from just continuing with what they are doing. Blockbuster has positioned itself in a relatively similar manner to Netflix, causing customers to second-guess which one is...