Netflix Case

Table of Contents

Introduction and Company Background 2

Current Strategy 2

Competitors 3

Market Position and Key Issues 3

Alternatives Analysis 4

Conclusion 6

Introduction and Company Background

Netflix is a company that put a spin on the video rental industry. This was an industry where traditionally if customers wanted to rent a video they had to travel to a physical retail outlet; Netflix delivers the rental service right to the customer’s door. Their business model is a subscription based model where customers pay a monthly fee to have access to a large library of titles, depending on the customers subscription choice they can have one movie at a time or multiple movies. The videos are mailed to the customer with a prepaid return envelope for the return process. Netflix uses the internet as a tool to provide a catalogue to their customers, they can browse through the catalogue and order their movie rental any time of the day. The company started its subscription services in 1999, originally it provided the traditional service fees where the customer was charged for each video rental including late fees. This did not catch on so they quickly came up with the idea to charge customers with a subscription fee. Netflix is considered one of the most successful dot-com ventures; it grew to 2.6 million subscribers by the end of 2004. These subscribers brought in revenues of $506.2 Million for the 2004 fiscal year. The CEO, Reed Hastings, has a vision to turn Netflix into a global distribution company using a unique channel for film producers and studios. His words were “As Starbucks is for coffee, Netflix is for movies".

Current Strategy

The company's main focus is customer service by reducing delivery times as much as possible, they have established many distribution centers across the United States, this allows the company to guarantee one business...