Case 3
Netflix Inc: Streaming Away From DVDs
Executive summary
Problem
Online based DVD rental business faces market declining and video on demand online streaming service will be major selection by users in the future along with development of internet television technology. Right now, Netflix major business model is online subscription based DVD rental service, which depend on online subscription information to delivery DVD to customers (Wesley 1). This industry is in a mature stage of life cycle and direct competition is very strong. However, video on demand business is an internet based interactive system in the growth stage life cycle. It is one of the trends of future media industry. In order to maintain media industry position, Netflix split its online based DVD rental business from its video on demand online streaming business but do not consider customers’ experience, which seriously hurt company reputation and Makes Company’s stock dropped by more than 50% (Wesley 1). In addition, customers do not like the name “Qwikster” that Netflix gives to original online based DVD rental business (Wesley 6).
Analysis
Video on demand is new video streaming technology applying which depend on internet download and must be paid advance, subscription (Wesley 3). Netflix is the first company offering online subscription based DVD rental service and has been retained many loyal customers. Thus Netflix has technology advantage to run video on demand business. Blockbuster is a direct competitor to Netflix depending on physical stores to run rental DVD business (Wesley 4). Blockbuster also invests video on demand business but Netflix is in the technical leader position right now.
Video on demand service is technical complex and with more opportunities and uncertainties industry. Through SWOT analysis, we know strengths and weakness that Netflix faces and opportunities and threats about video on demand business development. There are two possible alternatives:
Executive summary
Problem
Online based DVD rental business faces market declining and video on demand online streaming service will be major selection by users in the future along with development of internet television technology. Right now, Netflix major business model is online subscription based DVD rental service, which depend on online subscription information to delivery DVD to customers (Wesley 1). This industry is in a mature stage of life cycle and direct competition is very strong. However, video on demand business is an internet based interactive system in the growth stage life cycle. It is one of the trends of future media industry. In order to maintain media industry position, Netflix split its online based DVD rental business from its video on demand online streaming business but do not consider customers’ experience, which seriously hurt company reputation and Makes Company’s stock dropped by more than 50% (Wesley 1). In addition, customers do not like the name “Qwikster” that Netflix gives to original online based DVD rental business (Wesley 6).
Analysis
Video on demand is new video streaming technology applying which depend on internet download and must be paid advance, subscription (Wesley 3). Netflix is the first company offering online subscription based DVD rental service and has been retained many loyal customers. Thus Netflix has technology advantage to run video on demand business. Blockbuster is a direct competitor to Netflix depending on physical stores to run rental DVD business (Wesley 4). Blockbuster also invests video on demand business but Netflix is in the technical leader position right now.
Video on demand service is technical complex and with more opportunities and uncertainties industry. Through SWOT analysis, we know strengths and weakness that Netflix faces and opportunities and threats about video on demand business development. There are two possible alternatives:
Bibliography: David Wesley (2012) Netflix Inc.: Streaming Away From DVDs. Richard Ivey school business, The University of Western Ontario, Canada, N6A 3K7; phone (519) 661-3208