Netflix Inc. (Nasdaq: NFLX) is the world’s largest online movie rental provider, at present the number of employees more than 2400, and more than fifty distribution center to serves its 6.7 million customers with more than 85000 DVD movie rental service. Netflix are able to provide customers more than 4000 film or TV play online watch service. The company’s success comes from it can provide large number of DVD, but also it can let customers fast and convenient to get the serves, at the same time, it has the film free delivery. Netflix has five types to evaluate the customers get the most satisfied with the serves. Netflix can through the PC, TV and iPad, iPhone to watch movies. For the TV programs, Canada users need pay $7.99 per month, and the United States users $8.99 monthly, those customer who pay it, can online watch, also can free DVD by mail too. Netflix provide free Netflix App for iPhone and iPod touch (AAPL) user, it let Netflix members pay $8.99 every month through phone or iPhone iPod touch to watch TV programs and movies and do not need additional cost.
According to market research firm NPD Group, they released the video about the statistics of market share. It show that Netflix take up 61% of the market share about American film video market, the market share of the apple iTunes is only 4%. Netflix was founded in 1997; its founder for Netflix is Hastings who was a mathematics teacher. Netflix main business is online movie rental. Consumers can choose directly on the Internet movie then Netflix will be have free film to the customer, and must be previous to the film entity shop. Because Netflix need To open the market, Netflix customers provisions maximum three DVD but allow indefinitely renew, customer only need to pay $21.99 monthly fee. In addition, Netflix is still has the net movie critics and movie lovers and active discussion community. Favorable price, free delivery and convenient inquires, those reason let Netflix sales has a rapid rise, In the begging, Netflix only has a San Francisco shipping center, but now, it had stores at everywhere in the United States and set up 41 supply distribution center, and members rapid breakthroughs in 1 million, Now Netflix become the largest online movie rental company.
Q1 What are Netflixs’ advantages and disadvantages over their competitors
For the advantage, Netflix can transition flow media service provider, in addition to the initial accumulation of resources (more than 12000), but also because it relies on channel advantages and many American film companies, the vendor and the proprietors sign content supply agreement, ensuring that the content library update and rich. In the video library resource input, Netflix is never the blink of an eye, in the movie resources on purchase even direct monopoly latest program. For example, in the latest case of cooperation agreement, Netflix and EPIX pay TV channel contract value of $1 billion. Netflix launched immediately Watch (Watch Instantly) services, users can Watch a new and set the TV series card House “(House of Cards) the only way. By the star Kevin Spacey flicks, director David Fincher guidance, the investment more than 100 million dollars. Moreover, Netflix success is that it not only seize the online video industry opportunities and seize the opportunity, and the Internet TV to mobile phones, IPAD etc terminal radiation.
Compared with the traditional pay cable TV, Internet TV more individuation, optional more resources. Netflix has completed on cable television field layout, in 2008 through the Microsoft psu on Xbox 360 into ordinary families, and Microsoft will incorporate it into the Windows Media Center (Windows Media Center), means any equipped with Vista can put the content of Netflix delivered to the TV. Hastings respectively with SONY and samsung signed the deal made. Netflix service into Bravia TV and blu-ray player, later, Netflix began to appear in Vizio manufacturing on TV, the company is the largest LCD TV vendors. Broadcom then began in the flat TV chip Netflix copy software, so that all the TV makers in their products Netflix pre-installed. In addition users can also through the mobile phone subscription. The United States has relatively complete copyright protection laws and regulations, such as Netflix video industry company resources can get protection; At the same time in the consumer behavior, the user is willing to pay for the original resources. Q.1
For the disadvantage Cable TV network television than the advantage of local don’t they have the priority to broadcast popular large rights, Netflix launched immediately Watch (Watch Instantly) service is erosion cable TV advantages, many telecommunications business in Washington have launched a campaign, called on regulations organization Netflix occupy American living room. They drew up a federal law, this law will make in the Internet to watch video stream is very expensive. So far, Netflix is Hollywood propaganda the least popular channels. Movie usually first landing cinema and such as Redbox DVD service provider, finally able to customize the cable TV service providers and the hands of Netflix.
The reason for doing this is partly due to Netflix and not pay too much, some large movie studios do not want to reduce their DVD and cable TV license transaction. They delayed or restrict access to certain content, people can see the four seasons in Netflix before “Friday Night Lights,” but only in the NBC to see the fifth season and last season. Super bowl and academy award ceremony is never allow Netflix, Hulu or on YouTube. Netflix experience package price, performance less than expected, cut the user growth, and Starz talks broke down, and enter into Latin American market, plan split DVD mail department, to give up the resolution plan, at the same time also the share price high $300 minimum fell to $100 or so, shrink two-thirds
Q2. In the Netflix context, how does its distribution channel add value for customers? (Consider utilities, services and efficiencies with application)
Netflix companies began to seek through the mixed consumer consumption desire, to get the movie content, and the traditional 9 to 12 months delay to traditional leasing industry first operation, especially through the establishment of alliance, and the main movie producer. Netflix company will provide their users visit, the first run 90 days, than traditional lease brand, especially and Blockbuster movie. Use the same strategy, Netflix cutting key processing HBO seasonal goods, the most popular entertainment DVD format, divided and producers of the extra income. These deals have expanded participants in the chain PTP value framework, from the original producer to end user interest in purchase, capture, and affinity of entertainment is the highest. Another important measure is the strategic the extension of time, the brand from film to pre cut CD – ROM and dvd-rom music, such as the discovery of the blend Napster with high fidelity music content and legal ownership. More important is the timing of Netflix alliance and broadband service providers AOL time warner integrate their own customer base and other users of the hybrid digital and DVD format, targeted AOL.
The deal makes full use of Netflix professional knowledge, proper prediction data mining technology in entertainment. Through a mixture of physical and digital media, film and music label spread to family caused the explosive growth, profit, prolong the value-added income to filing medium. Surprisingly, Netflix company approved opportunity smaller artist released by DVDR format, using heuristic search engine technology recognition database format music mode. By creating a release format for “books to disk” natural text to speech technology, the expansion of Netflix himself the last step. More important is their ability, condensed the news printing material use RDF technology, to provide business and technical news content concise format, again not only through its weekly subscription model of fragment, and hybrid digital/DVD delivery format.
Process carefully, if not carefully timing, was sent to far more than the user’s cognition and market development of the lesson, to enthusiastic merger and acquisition of the Internet, such as Excite @ Home company and AT&T, shaping the brand, technology and user groups. Netflix company was recognized as the household brand recognition and trust based on the development in the field of personalized content delivery leader. This is their database mining and sales work of the foundation stone mixed personalized and data mining technology and entertainment delivery. Netflix victory: * Netflix company wins in “discovery” and negotiation, and simplified Netflix company has developed a variety of transaction mode, as’ process ‘you can hold and buy a DVD (site purchase), they send weekly (regular), or the order is put forward in advance to 1 as it release (dynamic). * “participant” part of the value framework of the key elements for success, including film label and television content of B2B2C value chain.
The winning strategy (advertising, marketing and distribution/distribution) : * alliance and bestbuy launch its own portal is very important, because the new DVD users most likely consumers try a new lease service. Set the world on fire, lack of a click and mortar strategy, can’t and convenient choice, competition and opportunity, promote sales and purchasing. * the Internet for more convenient shopping tools. It allows according to the user’s preferences and data mining technology of personalized demonstration. * use the post office delivery infrastructure, for Netflix provides a cheap and reliable mode of transportation for the customer, more convenient. * transaction model, including monthly delivery, and have the opportunity to no pressure “field group purchase”, created a “passive shopping” mode. * and film producer relationship established a model direct distribution the first round of the movie, far earlier than the rent. This will help Netflix the edge of the other lease brand, and movie producer of the extra income. * the theatre become the preferred method of Netflix advertising services, and increase the income of the film the hottest movie audience, not open ticket sales.
* Netflix company established a powerful database mining and direct mail marketing is based on a better view of the customer, and according to the total rent and predict the tendency to provide broadband in selected markets, and may directly appreciation to the subscription model, become a real “Netflix company” brand base. The development trend of the purchase. * customers enjoy the privacy order film style, they may not have ordered in physical Settings, including gay and lesbian and adult film material. * sample trailer on CD built-in order code, allow the user to easily sequence of video. Trailer for targeted according to the user’s preferences. * Netflix expansion DVD materials to packaging. * Netflix first run TV, especially HBO, expanding content producers income, and almost destroyed VHS and music record company established relationship, spread to music and customize your own brand burn CD, make final resolution of the phenomenon of Napster.
Careful analysis showed that the hybrid power purchase mode pavilion, and bestbuy, in cooperation with retail outlets allows storage film value choice to add physical browsing, but with a delay door-to-door delivery services. The evolution of the strategy to provide personalized and standard content through the broadband or physical medium, from movies to music and development group in the text, and then successfully launched a new Internet service and brand, visual Netflix. This strategy use value proposition natural extension, from movies to music, books, entertainment facilities and choice. Boot disk “book” subscription model, coupled with personalized and packaging technology and other areas, consumers want to stay in a field of news content, and almost no time to read, but have the time to listen to, the ebook is very important. Alliance in here. In the competition keep collar
Q3. Will Netflix be successful in the future? Is their business model sustainable? Why or why not? I think Netflix Company will be successful, incredible things, on the one hand, Netflix company are fundamentally change its mode, but on the other hand, the Netflix continue to travel the path of years ago. Netflix company become two different business from its catch all kinds of DVD rental and streaming media video of a big move, but in the heart, the move is the same type of change, the first Netflix company so popular: through the development of technology. Unfortunately, like most of evolution, it won’t to consumers the most convenient method. However, in the long run, as long as the Netflix proved to be superior bad discard, this will mean at home watching video way, we will continue to become faster, more easily. Of course, if not survival of the fittest, ready to crazy eating, will see another staggering to change how we are at home to watch movies and programs.