Netflix

Netflix

General Overview of Netflix

Netflix is the leader in the internet television network across the globe. It has more than forty million members in more than forty countries that enjoy unlimited hours of movies and television shows every month. After paying a low price per month, the members of Netflix are able to watch as much as they like anywhere, anytime in almost any internet connected screen. The members of Netflix can play, pause or resume the watching without any type of commitments and commercials (ir.netflix.com).

Discussion

Funding and Founding of Netflix

It was founded in 1997 in California by Reed Hastings and Marc Randolph. Hastings had invested about 2.5 million dollars in the start up for Netflix. This idea came to his mind when he had to pay forty dollars in the form of overdue at the time of returning a movie after its due date. Its website was launched in August with 925 works and 30 employees. These works were available for rent and introduced an online pay-per-rental model (Randolph, n.d.). It introduced the concept of monthly subscription in 1999 and dropped the single rental model in 2000. The company has developed a reputation on the model of unlimited rental of flat-free without any type of per title rental fees, handling and shipping fees, late fees and due dates. The company started the initial public offering in 2002 by selling almost 5.5 million shares of the ordinary shares at a price of 15 dollar per share. After a few months, it sold about 825000 ordinary shares at the same price. The first profit was posted in 2003 in which the profit was recorded to be 6.5 million dollars.

The company maintained and developed the video recommendation system on the basis of reviews and ratings by the customers. In 2007 it started to move from its core business and introduced the video on demand through the internet. The company has played a very important role in the independent film distribution. In 2012, the company announced that it added almost 610000 subscribers in America by the last quarter of 2011 (Wauters, n.d.).

Netflix as a Disruptive Technology

It is a good example of disruptive technology. The disruptive innovations refer to the targeting the market niche which is being neglected by the incumbents. As the disruptive technology does not serve the whole market, it is feasible for the new firms to start them. There is some crucial entry barrier due to which the entrants cannot access. The firm follows the end run innovation which requires duplication in the existing investment of resource which has a negative returns (Knott, 2013).

The company gives its subscribers an access to more than ninety thousand at a price of 5 dollars per month which has made it the leader in online movie rentals. The continuously improving of its model has resulted in helping the company to defy the critics that said that movie rentals will be usurped by different downloads or will be overtaken by the retailers of big box (Gonslaves ...