Netflix Strategy: How Netflix Beat Blockbuster and Remains Dominant in Online Video Streaming

NETFLIX STRATEGY 1
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NETFLIX STRATEGY 2
Introduction
Strategic management is necessary for a company to accomplish the intended long-term
production goals. Grant (2016) states that the strategies executed by the management are
required to consider the changes in the external business environment for a smooth flow of
business operations. A suitable strategy is supposed to be widely accepted by the various
stakeholders in the industry towards a successful flow of business operation. The top
management is tasked with developing an appropriate strategy that will maximize the
productivity of the business (Ehsanifar & Rasi 2017). A company is a highly productive hen
there is the use of proper strategy to control the various business operations and processes in the
market. Regardless of the size of the business, it is a necessity for the management to focus on
developing a proper plan that will manage the long run operations in the market. The strategy is
used in identifying the opportunities and threats in the market for a steady flow of the company.
Netflix is a film industry which is focused on developing strategy that will increase the
competitive advantage in the industry. It is necessary for a company dealing with services to
consider developing differentiated services that will meet the needs of the market (Hoberg &
Phillips 2016). Netflix strategy was able to handle the competition in the entertainment industry
towards a sustainable flow of revenue and profit margin. Netflix was able to overtake
Blockbuster as the leading video streaming company through the implementation of
differentiation strategy where the services are unique. The uniqueness of the market is used in
developing a smooth flow of business operations in the market for high productivity in the
market segment (Hernandez-Perlines et al. 2016). The use of technological innovation was an
important aspect that increased the customer base of Netflix globally. The quality streaming

NETFLIX STRATEGY 3
services by Netflix were used in beating Blockbuster as the leading company in the
entertainment industry.
Institutional Background
A brief history of Blockbuster
Blockbuster was established its first store in 1985 and was founded by David Cook
(Funding Universe, 2018). The company's primary focus was providing consumers with the
DVD of the latest videos and movies. The evaluation of consumer needs helped the company to
develop strategic stores all over the US. The first store was in Dallas which was headquarters of
the company. Blockbuster as able to enter the London and Canada entertainment industry in
1989 through the acquisition of various entertainment stores in the region (Funding Universe,
2018). Blockbuster had over 2,800 stores worldwide in 1992 due to the high acceptance in the
entertainment industry. Viacom later bought Blockbuster in 1994 for $8.4 billion with the aim of
extending operations of the company in the global market (Phillips & Ferdman, 2013). In 1999
Viacom provided an initial public offering for Blockbuster to acquire the needed cash to expand
the business. The stiff competition by Netflix at the time led to a reduced number of people
willing to use the DVD services offered by Blockbuster. Blockbuster as able to have over 9,000
stores worldwide which offered videos and movies on the DVD through the video rental service.
According to Phillips and Ferdman (2013) in September 2010 was declared bankrupt after the
company s unable to settle debts amounting to $1 billion. By 2013 Blockbuster had closed the
various stores in the US and all over the world due to reduced income from the stores.
A brief history of Netflix

NETFLIX STRATEGY 4
Netflix launched the first DVD rental and sales site in 1998 by Reed Hastings and Marc
Randolph with the meant to increase the number of people using the services (Netflix, 2018).
The online operations assisted the company to capture a large number of people in the US and
globally. In 1999 the company developed a subscription service that allowed a customer to view
unlimited DVD rentals monthly (Netflix, 2018). The subscription services greatly enhanced the
productivity of the company with many people willing to use the service. In 2002 the company
was able to have over 700,000 members in the US which rose to 3.6 million in 2005 due to the
high demand of DVD rental services (Bbc.co.uk, 2018). The continuous increase in the number
of Netflix members ensured that the company overtakes Blockbuster as the leading DVD rental
company in the US. According to Netflix (2018) in 2007 the company introduced the streaming
services to allow individuals acquire instant movies, TV shores, and latest videos. The company
later partnered with Xbox 360, Blu-ray disc players and several TV set-top boxes companies.
Netflix later partnered with PS3; internet connected TVs, Apple Company to expand operations
of the company in the video streaming industry. Netflix was able to launch operations in Latin
America and the Caribbean in 2011 whereby 2016 the company had expanded globally.
How Netflix beat Blockbuster
Changing technology
The ability to adapt to the changing technology assists the company to acquire the desired
production level in the market. Netflix was able to beat Blockbuster through the continuous use
of advanced technology in offering the video streaming services. Blockbuster offered rented
films, games and TV box sets to the consumers to acquire the required income in the
entertainment industry (Bbc.co.uk, 2018). The services of Blockbuster were not differentiated