Running head: NETFLIX IN 2012
Netflix in 2012
Lindsey Hi, Sandra Marnez, Erin Mortland, Kelsey Nietz, Sherry Kromschroeder
MGMT 499-50
Metropolitan State University
June 29, 2014
Sharron Stockhausen
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NETFLIX IN 2012
Table of Contents
Situational Analysis……………………………………………………………………………………………………………………………… 3
Industry Analysis……………………………………………………………………………………………………………………………..……………. 3
Customer/Buyer Analysis…………………………………………………………………………………………………………………………….. 3
Competition…………………………………………………………………………………………………………………………………………………….. 4
SWOT Analysis……………………………………………………………………………………………………………………………………………….. 4
Analysis of Firm………………………………………………………………………………………………………………………………..….. 5
Internal Audit of Resources…………………………………………………………………………………………………………………………. 5
Core Competencies/Distinctive Competencies……………………………………………………………………………….……….. 6
Competitive Advantages……………………………………………………………………………………………………………………………….. 7
Strategic Issues…………………………………………………………………………………………………………………………..…..……. 7
Identification of Strategic Issues…………………………………………………………………………………………………………………. 7
Most Important/Highest Priority Problems and Opportunities…..……………………………………………......…....8
Why Issues are of Strategic Concern for Firm………………………………………………………………………………………….. 8
Strategic Alternatives and the Advantages and Disadvantages of Each Alternative……..…......…......…..9
Recommendations……………………………………………………………………………………………………………………....……. 10
Recommended Course of Action and Why……………………………………………………………………………………………… 10
Identified Risks……………………………………………………………………………………………………………………………..…………….. 11
Backup Analysis with Numbers…………………………………………………………………………………………………………..……. 11
Implementation Strategy…………………………………………………………………………………………………………..…….. 11
Action Plan to Accomplish Recommendation………………………………………………………………………………………… 12
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NETFLIX IN 2012
Situational Analysis
Industry Analysis
By 2012, movie viewers have numerous options for where, when, and how they
watch movies: in theaters, cars, or homes and at any time of the day on PCs, smartphones,
tablets, DVD players, and video game consoles. Furthermore, market trends are shifting to
streamed movies and television programs rather than DVDs with the availability of new
devices with Internet capabilities. By 2012, more than 700 devices are capable of
streaming Netflix content.
Movie studios are responding to the changing market trends by experimenting with
release dates in order to determine how to maximize revenues. Some studios support
streaming services by releasing movies to them on the same day they are released in
theaters. Others are not as supportive and are significantly increasing the availability date.
Customer/Buyer Analysis
Netflix has identified three kinds of customers using the service: people that like the
convenience, people looking for a bargain (many available movies at a low price), and
movie enthusiasts that want a wide selection. The company has also determined that the
reasons consumers subscribed to Netflix are: the large selection, the comprehensive detail
provided for each movie (critic reviews, member reviews, trailers, and ratings), the ease of
use, the policies (no late fees, no due dates), the convenience of the pre-paid envelope for
returning DVDs, and the convenience of streaming movies at no additional pay-per-view
cost.
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NETFLIX IN 2012
Competition
Netflix’s top competors are Blockbuster Online, Amazon Instant Video, and Apple
iTunes. Netflix and Amazon Prime Instant Video are subscripon-based services o5ering
unlimited streaming for $7.99 per month and $79 per year respecvely, while other providers
rent individual movies or television episodes at prices ranging from $1 to $6.
Hulu started out offering a selection of free television shows and movies, with
revenues raised from advertisements inserted into the programs, but has since switched to
an advertising-supported subscription-based service, offering a wider selection of content
for $7.99 per month.
As brick-and-mortar movie rental chains are closing at an alarming rate, streaming
services are seeing exponential growth and competitors are vying for the place of market
leader. Currently, Netflix holds that place with over 23 million streaming subscribers,
watching around 60,000 titles for an average of 30 hours each month. However, the
competition is fierce, with new competitors entering the market and current competitors
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