Netflix Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Netflix

NETFLIX IN 2012

Summary

Netflix is famous as the world’s most significant Internet television network, which has around 50 million members. Netflix is present in more 40 developed countries and it is enjoying an exceptional market share of around more than 1 billion hours of movie shows and TV shows per month that also includes the original series. One of the best things about Netflix is that by paying low monthly fee, Netflix users can watch unlimited shows, anywhere, anytime, and most importantly on any Internet connected screen. Moreover, the users can pause, play and resume the streaming and most importantly, they can do all this without the interruption of commercials or any advertisement. In this case, Netflix performance from different perspectives has been discussed in detail. At the initial level, the performance form Jan 2010 to June 2011 has been specifically monitored. During this tenure, Netflix’s domestic subscriber has increased in a tremendous manner. From 12.3 million, their users have increased to a magnificent number of around 24.6 million. In a similar manner, their quarterly revenues has moved to $770 million from $445 million, which is again an exceptional achievement.

After sometime, the company took an initiative of introducing some strategies so as to enhance more growth options. They also introduced new pricing plans, which resulted in a price increase of around 60%. This option was not supported by customers and as a result Netflix’s stock price faced a noticeable decline of $210- $220 per share. This decline was due to a rumor that around 600,000 users have unsubscribed their Netflix connections. After these serious issues, Netflix’s CEO, Mr. Reeds accepted the complete responsibility and took the blame of this miscommunication. Since, the company started facing issues so they came with another new tactic on Oct 2011 that by the year 2012, they will offer unlimited movies and shows streaming to 26 million customers in United Kingdom and Ireland. They also announced their entry into Caribbean and Latin America by using market development strategy.

Analysis

They have been coming up with different strategies time to time. The company launched its rental movie service back in 1999. They had their own business model and strategy, which took the business on new heights of being the largest online network entertainment service across the globe. As a part of their strategy, they had been doing a tremendous job because they wanted to be ahead of their competitors at any cost. Hastings’s has been keen in providing the fast service more than its rivals and he kept his management’s focused on providing the new and updated offering to their subscribers as a part of product development strategy. Their subscription business model plays a real optimistic role in their success. When we talk about customers so we find them quite different from each other across the entire globe (Gomez, 2001). Under the subscription based business model, thier users were offered different packages and planes, which were based on different pricing options and features respectively.

What take them to new heights are the options of video streaming and DVD-by-Mail, which gives their users a different experience of ordering their desired DVD online through Netflix’s website. They have been doing remarkable job by expanding their network and making sure that their exceptional one day delivery approach must work efficiently. No extra fees for DVD, no late fees, no shipping charges and no other charges are applied that create a real positive impact on the customer’s mind and on the implementation of their subscription based business model. These achievements, optimistic approaches and excellent workable strategies result in booming their net incomes. As per the consolidated financial statements, their net profits were $66.7 million in year 2007 that reached to $226.1 million by the year 2011, which is an exceptional growth for Netflix. Although, their operational expenses are increasing with a rapid pace because in the year 2007, they had an operating expense of $324.7 million, which reached to $788.8 million by the year 2011, but the effect of this increase has been neutralized by the handsome profits of Netflix.

In analysis, another best thing that needs to be highlighted is their multi-pronged strategy in which they consider many aspects from different perspectives. They started focusing on making alliances with entertainment video providers so that they can grow from this aspect as well. Additionally, they also worked on making themselves user-friendly as much as possible. Moreover, they are also focusing on marketing and branding activities for Netflix because this will help them in enhancing their brand image in the eyes of both the users and the entertainment video providers. These approaches will help them in expanding internationally, which is the a part of their multi-pronged strategy (Manfred, 2003). They have always been looking for an excellent competitive advantage because in this .....................

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This case describes how Netflix created a business delivery model DVD-ROM drive using the postal services. In fact, Netflix used spaces that other players, such as Blockbuster, may not participate in the first place because they were limited to their business model. The case allows the instructor to develop the details of the opportunities that have allowed Netflix to deliver the value our customers desire. Case, you can explore the dynamics of competition between Blockbuster, Netflix and Wal-Mart, a new member in this space. Finally, the case describes the future of technology, such as video on demand (VOD), which in turn threaten the business model of Netflix's. "Hide
by Sayan Chatterjee, Elizabeth Carroll, David M. Spencer Source: Richard Ivey School of Business Foundation 20 pages. Publication Date: 03 February 2010. Prod. #: 909M93-PDF-ENG