NETFLIX SRATEGY TERM PAPER Harvard Case Solution & Analysis


Module 7 - Innovation Strategy

            The online internet streaming video market is highly crowded. Apart from NetFlix, there are many other companies such as HBO and Sling TV of Dish Network, which are dominating the market and its vast audience. It was in July 2015, when Comcast had announced its new streaming over the top service, which is called as Stream. The company planned to make it available everywhere in the entire US by the start of the year 2016 (Pelts, 2015). If we look at appendix table A, then the Internet traffic of all the video streaming companies could be seen for March 2015.

However, the US streaming video market entered into potential slower growth and most of the internet streaming companies and especially NetFlix, are looking forward to cultivate their streaming business in the other international markets. However, despite this slower growth, there are many companies, which are coming into this market such as HBO and Starz. This shows that there is a huge opportunity. NetFlix could still add around 36.5 million of the new subscriptions according to Reed Hastings before the market reaches its saturation point (Trefis, 2016). Therefore, we can say that the online streaming video industry is in the middle of the industry life cycle, perhaps at the Shakeout stage.

The strategic implications of this are that NetFlix will now have to cultivate its revenues from other international markets of the world. This has become an international trend now; however, the domestic business of the company is also far away from the saturation point therefore, strategically, NetFlix needs to first focus on its domestic market growth. The company should now focus on its cost concerns, as the company might lose its margins in the next few quarters as a result of the recent agreements of the company with the Internet Service Providers and the spending on the original series in Europe.

Disruptive Innovation

Innovation strategy is at the heart of the company and also the ability of the company to create a compelling experience for the customers and sustain a competitive advantage in the market. The company today is operating as a leader in the streaming video sector by operating efficiently and enhancing the experiences of the subscribers. Since, the inception of the company, Disruptive Innovation has been the hallmark of the innovation strategy for the company since its inception in the year 1997 (Pogue, 2009).

NetFlix is the first company in the history of US, which provided DVD by the mail order over online media. This service gave all the customers a more reliable, cheaper, and convenient alternative to the most traditional brick and mortar video rental stores. The customers can enjoy all of their favorite TV shows and movies through this medium more conveniently. This business had been later perfected by the management of the company to make it more efficient and fast for the customers to receive and return the DVDs.

NetFlix makes this possible by developing and investing in updated technology processes. The competitive implications for the firm’s innovation strategy are that the company will always have to remain up to date with respect to the technology and technological maturity. The company will also need to set up its investment priorities and invest primarily in the web based strategic technology assets, such as inventory optimization, personalized movie merchandizing, subscription account management, sign up, and its streaming software. This is the secret behind the innovative strategy of NetFlix.

Intellectual Property

            The intellectual property rights are important for NetFlix as the company has a combination of trade secrets, copyrights, trademarks, and patents for protecting the intellectual property of the company. The in-house video streaming technology is used by the company is patented and it makes use of the Adobe flash interface, which makes it compatible with the majority of the mobile and desktop devices...................

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