NETFLIX TIMING 2
Netflix’s Timing of Entry
Netflix was founded in 2007. The company was created by Reed Hastings. Netflix was a
DVD rental delivery company. Netflix utilized the USPS to deliver videos to customers. When
created it was the first company of its kind that provided that kind of service.
The timing into this industry was perfect. One major advantage was the only other major
competitors at the time of creation was Blockbuster. Blockbuster and Netflix were both in the
business of offering DVD rentals. Where the two separated was the delivery of that service.
Netflix allowed customers to receive the DVDs rentals via USPS whereas Blockbuster had stores
where customers would come and pick up the DVD rentals. This allowed Netflix to master their
brand loyalty and technological leadership. One example was opening “more distribution centers
across the country, and subscriber numbers continued to respond to the improved delivery
service” (Shih, Kaufman, & Spinola, 2009, p. 7). As more individuals adopted into Netflix’s
design it allowed Netflix to make a profit and take advantage of the delivery service it provided.
Netflix also had some disadvantages of being the first DVD rental company to provide a
delivery service. The first example was the undeveloped supply and distribution channels. Since
they were the only DVD rental company that offered a delivery service they had to keep
redeveloping their delivery technique to ensure it was profitable. The other disadvantage was the
uncertainty of customer requirements. Since Netflix was the first to offer delivery service
“market research may be of little help” (Schilling, 2013, p. 93). Netflix had to keep adjusting
