Submitted by: Submitted by shauntisew
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Category: Other Topics
Date Submitted: 04/09/2012 07:42 PM
Netflix
Netflix was founded in 1997 by Reed Hastings. They originally offered DVD’s on a fee per use basis. Currently, they offer flat rate rental-by-mail to customers with a growing library of more than 5,000 movie titles. Netflix offers prepaid subscription service where customers only need to sign up and pay a fixed subscription fee a month for unlimited rentals. Customers will now have no more worry of returning their movies late, as Netflix has cancelled the late-fee system. Since the start of the company, Netflix has been constantly trying to improve itself on a few aspects of the business in order to better position the company to its partners and most importantly, its customers. Moreover, the company faces tough competition not only from traditional mom and pop video rental stores, but also other online video rental companies. On top of that, Netflix has a huge rivalry with Blockbuster, the largest video rental chain in the US. In recent times, Netflix has also been facing the threats of online video and Video-on-Demand (VOD), and are currently looking into the possibility of entering this space.
Netflix operates in the world of pure competition. While they are the leading DVD online subscription service, Netflix competes directly with traditional DVD rental outlets. After creating the online subscription model, competitors such as Blockbuster and Walmart have introduced their own versions of the service. Netflix was able to patent its business model. The most threatening technology change appears to be "movies on demand" offered by different cable services. Although the prepaid subscription service did help Netflix to gain new customers and revenue, yet this model do not work with low volume customers (for example, customers who rent a DVD once in a while). High replacement inventory cost will occur since DVDs might get lost or damaged during the mail transit. Delivery time is still a weakness for Netflix in comparison to brick-and-mortar store like...