Netflix Analysis

The following outline is about Netflix and mega fritter away. Two achievementful companies with similar tar fetch commercialise alone at the same time with very different strategies which can postu belatedly the difference of success in the future or contrary go down. First of all we need to clarify what is the specific situation of from each one one. Blockbuster is a rental home picture show fellowship that has been hint the market during many years, since the VHS cassette till the appearance of the DVD and the expansion of the lucre.They strike had a well-designed strategy which let them crop significantly cosmos the leaders in the market, having in 2006 more than than 5000 locations within the US. They basically offered a capacious physique of in-store flick rental. As it is said in the text their monetary success is based on the maximization of the days that a picture is rented. Also it is important to mention that a big part of their revenues came from the lat e fees (10% of the total revenues in 2004). But as the times were changing, the guests needs were changing too and Blockbuster was in the need to reconcile his strain to the market.Netflix, being so visionary ten years ago, was launched as a personalized DVD movie rental using USPS to quit DVDs to its subscribers and using a pricing model similar to the one utilize by video stores. The following analysis focuses on how those devil companies that obscure the same needs, they stick out solely different strategies and by analyzing both strategies we leave see how a good strategy and a good noesis of the market can make the difference and take a follow to the success. Basing on the data and information in the suit of clothes, Blockbuster would be sententious and Netflix would be long.Blockbuster has an erstwhile(a)-fashioned strategy, they focused all their efforts in differentiate from Netflix by integrating online and traditional in-shop services and by copy Netflixs st rategy of no late fees. Despite their attempts they had significant execution losses and they just grew 5% (they expected a bigger growth by suppressing late fees). Contrary, Netflix would be long because from the beginning they were visionary, and they were offering what clients unavoidable while the times were changing. Because of that their net income has been maturation significantly.As inferred in butt on 1 in the case, net income multiplied in just two years (in 2004 was 21595$ and in 2006 the net income was 49082$). It is important to take into account what jobs did Netflix and Blockbuster for consumers. Blockbuster was the leader in the market by offering consumers in shop movie rent. They perfectly covered the need of watching the modish movies at home. They were very successful and so they expanded by spread newly locations with the objective that at least 70% of the population have a Blockbuster very close.Netflix though, offered movies but unlike Blockbuster, they deliver the rented movies to the customers houses. They changed the concept of traditional movie renter. Netflix was created as a new concept, but covering the same need that Blockbuster was covering. Over time, Netflix grew more and more thanks to this competitive advantage that do the difference from Blockbuster. rough their profit models, Netflix reached profitability by investing capital in inauguration more distribution centers producing more subscriptions thanks to the improved delivery service.As showed on Exhibit 2 in the case, the cast up on the bend of subscribers was very significant with 107 in 1999 to 6316 subscribers in 2006. Netflix based its strategy in the concepts of convenience and selection and they showed it by introducing the prepaid subscription based model where customers had to redeem a monthly fee instead of the old per rental land model. With this strategy they were be able to have damp customer retention. On the other hand, Blockbuster was primar ily focused on making the company profitable by expanding geographically, opening new locations so that they can increase the market shargon.Blockbuster focused the strategy on the concept of movie night, it means that their market is a specific niche in which customers make an impulsive decision and rent a movie when they get in the shop. Thats why they only have uplifted-demand movies (unlike Netflix that apart from high demand movies, they also have old or independent movies). The Netflix success is due to a series of different steps that the company has had to confront from the beginning till nowadays.The changes in the customers needs and in the society lead Netflix to a constantly changing strategies. They launched the platform in 1997 like an resource way to the traditional movie renters, to provide home movies services better satisfying customers needs. They took advantage of the latest hit in the new technologies, the DVD. And they acted like early-adopters of the DVD f ocusing their efforts in attracting owners of this new device. They were being successful, but they started losing customers so they were in the need to make some changes.And they did. Netflix totally changed the pricing strategy from the traditional pay-per-rent to the subscription model which allowed customers unlimited movies a month. They came up with the recommendation system as they needed to differentiate from the traditional video rental stores offering something that they didnt offer. To increase the quality and number of offered movies, they created business relationships with the major studios so that they reach customers needs. As a consequence of this growth, they increase the distribution channel with USPS.But apart from that, Netflix was having a huge problem. They were constantly losing customers. To solve these problems they thought different attract the old customers that have canceled their subscriptions. To reach this goal, they changed the unsubscribing policy a nd instead of trying to retain them, they made the cancellation process as easy as the subscription one. Probably many of the customers that left field before will come back to Netflix when the platform will receive more awareness or when just decided that they want to open up their accounts.So if all those processes were easy for them, the impression of the brand on the customers mind will be positive. At this point Netflix was doing well, the metrical composition of subscription were increasing and their net income was increasing too. What would be next? The new technologies market is a constantly growing and changing market. Something that is being a hit now, in one year could be completely forgotten. With the expansion of the internet many in-shop services will be affected.Services that can be offered via internet will replace the traditional commerce. And this will be the case in the video rental. The traditional video rental services whether in-shop or delivery will tend to disappear because of the following reasons or assumptions -Internet is growing more and more. Many improvements are being made to improve the quality. -The number of people who have internet at home is also increasing. -Customers are adapting to the new era and they are adapting to new technologies and regulations.So basing on that, as Netflix already did years ago, they should be innovative again and take the guess to change in order to keep profitability for the company. They cant avoid the new trends, if they dont follow the changes and they dont adapt to them, they will disappear because customers will change to those brands that cover their veridical needs. Netflix was offering what customers needed, but this is changing with the appearance of VOD, and so by covering the same need, they should adapt to the times by changing their strategy.