Strategic and Case Analysis Netflix

Running Head: STRATEGIC ANALYSIS 1
Strategic and Case Analysis:
Netflix

STRATEGIC ANALYSIS 2
Table of Contents
1. Introduction..............................................................................................................................2
2. Institutional Background..........................................................................................................3
2.1 Brief History of Blockbuster..................................................................................................3
2.2 Brief History of Netflix..........................................................................................................3
3. How Netflix Beat Blockbuster.....................................................................................................4
3.1 Changing Technology............................................................................................................4
3.2 Retail Outlets versus operating Online..................................................................................5
3.3 Pricing Strategies...................................................................................................................5
3.4 Netflix Innovations................................................................................................................6
4. Netflix as a dominant provider of Online Video Streaming........................................................7
4.1 Netflix stumbles: The demise of Qwikster............................................................................7
4.2 Netflix rebuilds: The rise of original content.........................................................................8
4.3 The future of Netflix..............................................................................................................8
5. Conclusion.................................................................................................................................10
References......................................................................................................................................10

STRATEGIC ANALYSIS 3
1. Introduction
Strategic analysis of a company is one of the most important processes for enhancing its position
in industry. It assists the organization in understanding different strategic aspects and
implementing effective strategies to stay competitive over its competitors. There are various
tools and frameworks, like; SWOT analysis, PEST Analysis etc. which can be adopted for
strategic analysis. The major objective of this report is to include the strategic analysis for case
study organization, i.e. Netflix. Netflix is an American Organization, which provides television
and movies by streaming online media and delivery by mail. This report includes brief history
about both Netflix and Blockbuster as well. Moreover, there is the discussion that how Netflix
can beat Blockbuster through its advancements and effective strategies. At the end, the last part
of this report discusses about the dominance of Netflix in the area of online video streaming. By
analyzing this, it includes the future of Netflix organization in Online Video Streaming segment.
2. Institutional Background
2.1 Brief History of Blockbuster
Blockbuster, i.e. Blockbuster Entertainment Inc. is an entertainment service provider, which is
based in America and offers video games and home movie rental services via DVD mail
delivery, video rental shops, media streaming, cinema theatre and on-demand video. Throughout
the 90s, the organization has become globally known. In the year 2000, the company had given
an acquisition offer to Netflix, but Netflix had rejected that offer. Now, Netflix is operating is
business operations as the biggest competitor of Blockbuster. Since its establishment by David
Cook, the organization has hired 84,300 employees all over the world, which include
approximately 58,500 in US and about 25000 in other nations. Currently, it is operating 9094
stores worldwide (Blockbuster, 2017). There are various risks, which are faced by Blockbuster,
like; competition from Netflix, on demand video services, Redbox automated kiosks etc. These
are the major factors behind the eventual demise of Blockbuster. In the duration of 2000s, the
company started to lose its revenues and it claimed for bankruptcy prevention.

STRATEGIC ANALYSIS 4
2.2 Brief History of Netflix
Netflix is an American organization, which was established in the year 1997 by Marc Randolph
and Reed Hastings. It is an entertainment company that was founded in Scotts Valley, California.
It offers different services related to streaming video on demand and media (Netflix, 2017). It
provides the customers opportunities to stream the TV episodes and movie through internet. In
the beginning, the business model of Netflix involved DVD rental and sales. However, Hastings
abandoned sales of DVD after one year of its establishment, so that it could focus on rental DVD
by mail delivery. Since last few years, the organization is carrying out its business operations in
international markets by offering better services than its competitors. Currently, it is serving 190
countries and has 109.25 million subscribers all over the world, inclusive of 52.77 million in US
(Chopra, Chopra, Veeraiyan, and Veeraiyan, 2017). In addition to its wide range of movies and
TV episodes, the original series of Netflix is also there on internet for its diverse customers.
The mission statement of the company is to enhance the number of subscribers for video
streaming in local and global market. For this, organization is constantly improving customer
experience by diversifying its services. By the use of different strategies and focusing in this
mission, Netflix wants to become one of the best entertainment companies internationally. It
assists content developers all over the world to increase the customer base globally. The
organization is implementing various marketing and business strategies, so that it can generate
more revenues and profits than its competitors.
3. How Netflix Beat Blockbuster
From its founding, Blockbuster had ruled the rental movie business for the decades. In 2005, the
company was valued at over $8 billion. Meanwhile, Netflix started the use of postal service to
deliver DVDs. By using effective strategies and market tactics, the company has become leader
in the industry and soon, Blockbuster has filed for bankruptcy. The organization lost $518 billion
in the year 2010, $1 billion in debt and it had closed most of its stores. After this, Netflix attained
16 million users by operating a well-established business and online videos online (Chen, Zhou,