Netflix is a popular and affordable choice for film entertainment enthusiast and has seen significant growth in just over decade. As a novice and avid Netflix subscriber, we have found a company that has found its target market in our home. It appears that Netflix founder, Reed Hastings, made the right business moves at the right time. He entered the market at a time when he could have found himself failing to succeed. Realizing that the demand for instant streaming was a bold move in the late 1990’s when the internet and personal computers were still new and a developing phenomenon.
A risky business venture proved to dominate the market and based on a small idea developed at the gym; and, Hastings didn’t know the outcome of his business or the consequences of changing to unlimited due dates and no late fees. Netflix: Why it Works It appears that Netflix managed to put itself in the enviable position that is occupied at the end of the fiscal 2010 due to its ‘no late fees’ testing that occurred in 1999. Up until then, the market of video rentals had never heard of a ‘no late fee’ when a rented video wasn’t returned by the due date.
This began an industry shift, changing the game of movie rentals from ‘reel’ to ‘real’ and Netflix allowed its customers to view the rented movie at the leisure of the renter paying only a flat rate per month. As the article stated, founder Reed Hastings, had to pay a $40 late fee for a Blockbuster movie rental. Even in 2014, a newly released cinema DVD costs just around $20 plus tax. Back in 1997, Hastings could have possibly purchased two copies of Apollo 13. In addition to the ‘no late fee’ shift, Netflix also began allowing its customers to stream movies live from their home computers.
The Research paper on Netflix Case Analysis 2
... rental fees. Netflix was born as a result of a spontaneous reaction to the traditional movie rental model which included costly and annoying late fees. Hastings ... tapped into a new, emerging market venture which enabled customers ...
In 1997, only 18% if the American population had internet in their homes (File, Thom. 2013).
Jump to 2010 and the American population that had internet in their homes jumped to 71. 1% according to a census bureau article published just last year. The perks of instant streaming has allowed movie watchers to not have to leave the comfort of their own home to instantly watch the movie of their choice. As the article pointed out, Netflix quickly realized the competition in the market. With Blockbuster dominating most of the industry since the 1980s, Hastings certainly wanted his company to be as successful as Blockbuster.
In the infancy of Netflix, it modeled much like Blockbuster with the exception of having to leave the couch to rent a movie. Looking at the market from a situational perspective, an increasing number of households were using the internet just as Netflix was taking off. Strategically as the industry has seen, Netflix made a bold and intelligent move in redirecting their business. Customers can now have unlimited due dates and no late fees on movie rentals. Blockbuster battled the competitive market to offer its customer base a similar plan of action known as Total Access which allowed grace periods.
By that time, Blockbuster had seen a major reduction in revenue realizing that Netflix was winning in the movie rental industry. It was too late for the Blockbuster, who was once the industry leader. Environmental elements play a critical role in any market. America is a fast paced country and psychologically, we all want everything “right now. ” We don’t want to wait, pay extra, or leave our homes if we don’t have to. Netflix took advantage of the human behavior that is evolving every day. Instantly streaming a movie after a hard work week or a DVD rental waiting in the mailbox that has no late fees makes it easier to enjoy the weekend.
The Research paper on Outline the relative strategic positions of Netflix and Blockbuster. What are the key factors that explain the ultimate Blockbuster demise?
... did not necessarily plan their movie watching in advance”. Blockbuster viewed itself as a rental outlet and Netflix as a delivery service. It ... to your industry or market is a waste of time and money”. (Johnson, Christensen & Kagermann, 2008, pp. 56) Blockbuster missed ... was too late, and when they did recognise the threat their response was to copy, not to innovate. Blockbuster first dismissed ...
Socially speaking, people no longer want to take the time to browse a video store, travel out of the way to a store, wait in lines or be disappointed that a rental is not available. Browsing Netflix online provides instant streaming, no lines, and the newly released flick isn’t out of stock. Anthropologically speaking, we are an internet driven society where nearly every industry is vulnerable to destruction without some type of internet. Most people use e-mail instead of mail because of the instant correspondence which was nearly unheard of 2 decades ago.
Netflix jumped on the opportunity without realizing the success that would unfold. Realizing that the population reacted to instant stimulation over decades of observation really upped the ante for Netflix. Technology is a part of our everyday lives. We use it to communicate, work, entertain, and socialize. Our world is constantly stimulated by the technology that is being introduced. Netflix provides personalized service to showcase movies that each customer may enjoy based on ratings and previous viewings. The suggested “flix” are determined by what the customer adds to their queue and what rating is given after the viewing.
My husband and I are big movie buffs and would frequent the local Blockbuster, often hit with late fees later. After the local Blockbuster closed, we visited the multiple Redbox rentals for movies. While we liked Redbox, we were disappointed that frequently there wasn’t anything we wanted to watch, the newest hit was sold out or we forgot to return in and got hit with the dreaded late fees. We are relatively new to Netflix and we are very impressed. We have chosen to get our rentals in the mail and it works so much better for our family and oddly enough, our subscription totaled out to be cheaper than our Redbox binges.
Redbox doesn’t offer the same personalized service as Netflix and doesn’t have the same selection. Netflix has found a niche in the market by using technology and human behavior to shape the way the business runs. A behind the scenes look at the development of Netflix is enlightening. A simplistic idea that generated a shift in the industry is what was needed to keep up. Let’s face it, the times, they’re still a’changin’. Streaming videos, music and data instantly is what the country demands. While the idea behind Netflix didn’t necessarily improve the quality of life, it certainly improved the quality of entertainment.
The Essay on Netflix and Consumer Behavior Trends
... a convenient reminder to the entertainment and technology industries that consumers increasingly want on-demand ... and Redbox are all competing on the same playing field, but for now Netflix remains ... want, without any late fees (Cohan). Today, Netflix’s more prominent service, instant streaming video, offers ... at the time. Netflix experienced much success with DVD-by-mail rentals, hitting the one ...
