In short, this case briefly discussed Netflix’s overall business. It went into detail about market trends in viewing home movies, and the competitive intensity Netflix faces against Redbox and Blockbuster. It went into great detail about how Netflix’s shipping and returns system works as well as how they offer thousands of videos with streaming capabilities. The case also discussed Netflix’s business model, strategy, performance in the market, and future prospects.
The case then started to discuss Redbox and Blockbuster. The main focus was on Blockbuster’s financial turmoil and their lack of advancement in technology, which led consumers to better alternatives such as Netflix. It turns out Netflix’s success indirectly put Blockbuster under financially and caused them to lose the majority of the market share.
The case finally wraps up by explaining Blockbuster’s survival strategy and what they plan to do to have financial prosperity in the future. SWOT (Netflix): Strengths: Use of Cinematch(customers get matched with movies of their tastes rather than a general list of highly ranked movies), flexibility of content delivery * Weaknesses: Unattractive highly priced monthly subscriptions, loss of key partnerships that lead to limiting streaming content, reliance upon third parties may come with high license and acquisition fees.
Opportunities: Increased demand for online video streaming, growing demand for video game rentals(which they do none of), strategic partnership with strategic third party businesses(Nintendo, Microsoft) * Threats: Piracy, increasing demand for Video On Demand(VOD) delivered by cable and satellite providers, increasing shipping costs, must constantly change with technology and improve method of delivery, other companies offering similar services for games and videos(GameFly and Blockbuster) Problem (Blockbuster)/Recommendation (Netflix).
The overall problem in this case was Blockbuster’s financial situation. Since nearly 2004 and the introduction of Netflix, Blockbuster has failed to perform. Blockbuster needs to keep reworking their entire business strategy and offer current technological ways of delivering content. As for Netflix and recommendations, I would highly advise them to push their business more towards streaming. Also, Netflix needs to develop and create partnerships with third party companies so subscribers can instantly stream new releases. If this is done, Netflix will have happier subscribers and reduce their overhead by significantly decreasing shipping and facility costs, and have less deprecation on discs.