Problems in Netflix Company

Problems in Netflix Company

Introduction

This report first seeks to highlight the innovative thinking behind Netflix's success followed by the major issues surrounding Netflix's operations in 2007, leading onto an analysis of the technological advancements within the DVD rental industry at the time, paying particular attention to the growth and development of the VOD market. The report also seeks to explore the various strategic options Netflix has available to tackle this new and potentially lucrative market whilst considering their potential impact on the long term strategy of its core business in order to provide recommendations as too how Netflix should best deal with the situation at hand in order to enjoy continual growth and prosperity for the future.

Netflix's concept is a direct result of the innovative thinking of Reed Harold, the company's founder and CEO. Harold typically saw the potential to satisfy customers better through the use of a new distribution channel online, using the American postal service. Through this business model he pioneered online DVD rentals pursuing a route to market that had never been taken before (Conlin, 2007). Netflix Chose To target the DVD market rather than replicating the model of video retail chains at the time at a time when 'blockbusters' operated using a brick and mortar approach where 70% of its revenue was depended upon new releases primarily renting videos.

Netflix avoided competing head on and went under the radar when it came to Blockbuster's competitive analysis. Blockbuster didn't see Netflix's offering as a threat until 2004 after Netflix had gained an extensive market share.

Netflix learnt to experiment in creating this new online market, the company had no way of learning from the mistakes of competition that had previously ventured into the market. For example Hastings tested the marketing via trial and error originally using the Netflix website as a portal for selling theatre tickets and a price comparison service for various products online which proved unfruitful, it soon became clear that focus was needed and they decided to concentrate on the DVD rental business there forth.

Blockbuster could have easily destroyed Netflix if they had foreseen the potential earlier but they didn't, highlighting the problems surrounding big companies with the mentality that because they are big they don't need to change. Lack of innovation has cost Blockbuster dearly sending them into bankruptcy within a 5 year period. This is what happens in a market influenced by technological advancements.

Problem statement

The problem began in July when the company announced it would separate its plan of sending DVDs by mail of their service online. Each is available for a monthly fee of $ 7.99 and does not affect those who only want to see audiovisual productions anywhere.

Proposed solution

The suggestions for the innovative endeavor of the company in line with its mission declaration to endorse minor recognized self-regulating and exposed of mainstream production films even as continuing the accomplishment of accessible processes and practicing innovative ways interested in unexploited markets during the use of VOD online streaming guarantying accomplishment for the ...