Assignment on Business Policy : Netflix

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Business Policy: Netflix
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Professor’s name
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Abstract
Established in 29th of August, 1997 by Marc Randolph and Reed Hastings, Netflix is an
entertainment company that specializes in the delivery of DVD by mail, video-on-demand and
video streaming media. The company has, since then, grown to be one of the biggest companies
in the entertainment industry. It currently, enjoys a large client base and is one of the most
trusted companies in streaming of television series. The company has been facing a number of
challenges; among them being financial constraints. Threats from competitors such as Redbox
are another challenge facing the company. A ban of the FCC Open Internet has denied its
customers access to online streaming. This report is aimed at providing the background of
Netflix and discusses the purpose and current issues affecting the company. It also provides
economic analysis of the company and discusses the limitations of the enterprise as well.

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Introduction
Netflix is an entertainment company established on 29th of August 1997 by Americans
Marc Randolph and Reed Hastings (Grinapol, 2014). Netflix specializes in providing DVD by
mail, video-on-demand and in streaming media. Netflix extended its services in 2013, through
online distribution and television and film production with its first debut series, the house of
cards. Netflix’s headquarters are located in Los Gatos, California and have offices in Korea,
Japan, India, Brazil, and the Netherlands.
International expansion has seen the company’s growth into over 190 countries
producing “Netflix original” content. In 2016, Netflix made more series and film releases than
any other network channel in American, with 126 original television series. Netflix boasts of a
vast number of subscribers in the United States and worldwide.
Purpose of Netflix
Hastings founded the Netflix Company in 1997 with the original idea of establishing
Netflix. To propel his business idea, Hastings bought few audio CDs from the tower records in
Santa Cruz and emailed them to himself to the realization that they were all in good shape
(Byrne, 2012). This boosted his idea of founding his movie rental business. The Netflix
Company was founded on the main idea of mailing rental movies to customer indifferent
regions. Backed with his idea was the finance to begin his rental business. Initially, the Netflix
movie business did not pick up as expected with low demands on mail delivered movies. This
created a decline and loss in finances for four years. Netflix attained its breaking point in the
movie business in the year 2002 when they made significant profits, and the Netflix Company
went public.

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To ensure the success of his business, Hastings placed his focus on three core elements,
to put the customer's satisfaction first, make forward investments in his business and ensure
savings from his business (Lusted, 2013). He devised these as criteria to sustain the growth and
development of the Netflix business, which benefitted greatly.
Hastings was crowned among a hundred most influential entrepreneurs in the year 2011.
He commented on his selection by saying that good entrepreneurship needs time commitment
and hard work. That one need be patient and persistent and not just aim for quick returns.
Netflix today depends on the internet for transmission on online television series through
their platform. Customers subscribe monthly for their services and engage in a social platform,
Netflix friends, where they share their movie ratings, thoughts, concepts, and ideas (Gavrilescu,
2014). Netflix, however, regarded their business as entrepreneurial and not social making the
social tendencies a disruption to the company.
Issues affecting Netflix
Even with massive profits and recognition in the film industry, the Netflix industry has
faced a number of setbacks in its development. Among them is the lack of enough finances to
fund the initial stages of the business. The company halted DVD rental and sales in 1999 for
financial reasons and to support their business invited an investment of $30 million by the group
Arnault after which they effected the subscription program.
Netflix experienced losses and lost capital for four straight years before finally making
profits in 2002. In 1999, Netflix declared a monthly subscription concept to effectively cover
costs and manage to fund. This did not see the company through causing them to offer itself to
be acquired by blockbuster for an n amount of $50 million. Their offer was however rejected. In