Movie Rental Industry

1. What is Netflix’s strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fit the competitive approach that Netflix is taking? What type of competitive advantage is Netflix trying to achieve? 1-2pages

Netflix moved past a labor-intensive and outdated mode for recommending and marketing more obscure movies and developed a first-class algorithm-based recommendation system that enabled the company to take a competitive advantage in the industry. With a visionary founder in Reed Hastings, who knew as early as 2001 that physical media would be supplanted by VOD or streaming options and prepared the company early to have a functional VOD offering in place when the technology caught and Netflix’s success continues.  Netflix’s streaming service started out as online and on the computer only, but now Netflix can be found everywhere.  They are on the Roku, the Xbox 360, the PS3, the Wii, Apple TV, Google TV, the Boxee Box, built-in to TV’s and Blu-Ray players.  Almost any box or machine that is capable of streaming content over the internet has Netflix as one of its apps.  Netflix is the current #1 streaming option for movies and TV shows. 

Netflix is trying to adopt a broad differentiation strategy by seeking to differentiate the company’s product offering from rivals in ways that will appeal to broad spectrum of buyers and it is trying to accomplish this strategy by using internet services to cater to different sections of people using various applications like Wii, Google, Xbox etc.

Netflix competitive advantage can be attributed to the fact that it was the first company in the movie rental industry to recognize a new trend in consumer behavior. With growing online sales in other merchandise, Netflix was the first to allow customers to rent movies online and have it delivered to their homes very quickly at roughly the same price it would cost to get it from physical storefronts. It was also the first to have a subscription...