Netflix Business Strategy Analysis
Added on 2020-05-04
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Running head: CASE STUDY ANALYSISCase Study AnalysisName of the Student:Name of the University:Author’s note:
1CASE STUDY ANALYSISTable of ContentsIntroduction......................................................................................................................................2Institutional Background.................................................................................................................2A brief history of Blockbuster.....................................................................................................2A brief history of Netflix..............................................................................................................3How Netflix beat Blockbuster..........................................................................................................4The Changing Technology..........................................................................................................4Retail outlets versus operating online..........................................................................................5Pricing Strategies.........................................................................................................................6Netflix’s Innovation.....................................................................................................................7Will Netflix remain the dominant provider of online video streaming............................................9Netflix Stumbles: The demise of Qwikster..................................................................................9Netflix Rebuilds: The rise of original content............................................................................10The future of Netflix...................................................................................................................12Conclusion.....................................................................................................................................13References......................................................................................................................................14
2CASE STUDY ANALYSISIntroductionBusiness strategy plays a significant role for the business organizations as this determinesthe success of the company in the competitive market. As commented by Verbeke (2013),business strategy is defined as the choices about business positioning relative to competitors. Asthe customers are easily bored with a similar trend, the demand, and expectation of thecustomers’ changes. Therefore, the business organizations need to change their business strategyin accordance with the present market and trend in order to sustain in the competitive market.The modification and change in the business strategy provide an opportunity for the businessorganizations to bring innovation to the existing business thereby, increasing the revenue.The report is a case study analysis about the technological advancement and innovationof Netflix and Blockbuster. The report also sheds light on the impact of changing technology,pricing strategy and the difference between retail outlets and operating value. Additionally, thereport also discusses whether Netflix has the potential of being the dominating provider of onlinestreaming. Institutional BackgroundA brief history of BlockbusterDuring the 1980’s and 1990’s, Blockbuster dominated the US home video rental market.Blockbuster is an American based company that provided video game rental services along withhome videos. The company was internationally popular throughout 1990. The companyestablished more than 9000 stores both nationally and internationally and had employees morethan 50,000 employees in the US and more than 25,000 employees internationally. The range of
3CASE STUDY ANALYSISservices provided by the Blockbuster includes VHS/DVD home video rentals along with videostreaming on demand. The company solely operated on retail shops. As a result, the customershad to visit the retail shops in order to access the services offered by the company(Blockbuster.com, 2017). However, competition from Netflix, Redbox resulted in the decreasingdemand of the company eventually shut down the majority of the stores in the US. In 2000, thecompany started losing their popularity thereby, encountering a significant loss in the revenue.The company filed for bankruptcy protection in 2010 after which the satellite television providerDish Network bought the remaining 1700 stores in the US (Blockbuster.com, 2017). A brief history of NetflixNetflix is an American entertainment company founded in August 1997. The range ofservice offered by Netflix includes streaming media and video on demand. Due to similar serviceproviders in the US market, the company expanded their business into film and televisionproduction. Initially, the business strategy of Netflix included renting and selling DVD. However,considering the changing demands of the customers and the prevailing competition in the USmarket, Netflix changed their business strategy by introducing media streaming simultaneously.At the beginning, the company expanded the video streaming service to Canada but later theservice was operated in more than 190 countries (CNN, 2017). In 2013, Netflix entered the content production industry by broadcasting their first series“House of Cards”. Since then, the company has expanded their services to both films andtelevision series that have been hugely popular. Netflix has released more than 120 original seriesor films only in 2016. Due to such innovative and a wide range of services, as of October 2017,Netflix has an estimated 109.25 million subscribers globally out of which more than 50 millionbelongs from the US (Netflix.com, 2017).
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