Netflix – it’s is one of the largest internet television networks in the world, with over 50
million members in nearly 50 countries enjoying more than two billion hours of TV shows and
movies per month. Their corporate headquarters located in Los Gatos, CA employs
approximately 2,000 employees and their reach includes distribution centers all over the country.
For one low monthly price, members can watch as much as they want at their own pace. Netflix
is a good example of how fast technology mixed with internet use can quickly evolve. They are
one of the first developers in the online movie rental space. Their business began as a mail-order
DVD system and has developed tremendously into a platform that can stream movies, TV shows,
etc. It has been able to keep up with competitors like Blockbuster, Amazon and, even, Walmart.
It has truly taken the movie rental business to the next level.
The beauty of Netflix is that it allows customers to pick a package that fits their lifestyle
and TV/online viewing habits. The company offers a variety of subscription packages ranging
from $8.99, $13.99 or $16.99 which all include streaming of online content and a specified
amount of DVDs per month. “Netflix has earned approx $29 million, or 49cents per share in the
quarter, up to 11cents per share a year earlier” stated the Associated Press in 2013. Netflix is
aware that its long term development is dependent on the growth of the internet. The capability
of online streaming offers more online options and is available to consumers through various
sources. As long as Netflix is keeping up to date with the development of the online world, the
company should be able to hold its ground against competitors.
The forces within the movie rental business are highly competitive and include fast
growing technology, effective online marketing, low costs, variable customer preference in
movie tastes/genres, etc. Netflix has developed a modelling strategy where if you pick a certain
movie to watch, it recommends another movie that you might like. It models your current
viewing habits to predict and help aid your next purchase and create convenient opportunities.
Using the five forces analysis in competitive strategies, we can analyze Netflix’s strategy:
Low cost provider: Netflix offers the advantage of a low fixed rate of $8.99 monthly fee
for unlimited streaming of movies available online or mail rental DVDs (with no late fees
for returns).
Broad differentiation: The comfort of renting movies however the customer likes, online
streaming or mail in delivery (one day delivery option available).
Focused low-cost strategy: The attraction of customers through continuous and
