Competitive Strategies Case Study

Netflix’ Competitive Strategy: The Business Lessons

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Abstract:
This case study’s primary objective is to get deeper insights into Netflix’ business model and all the contributing factors that made it very successful. The case can be used further to challenge the sustainability of this model. In a niche market like the movie rental business, it is critical to stay abreast of competitors while focusing on the target customers. Established in 1997, Netflix Inc. (Netflix) entered the US movie rental market with the aim of catering to the entertainment needs of the time-constrained US consumers. Netflix emerged as one of the first US companies to offer DVDs by mail, delight its members with its ‘no late fees’ feature and the freedom of receiving and returning DVDs from the comfort of their homes. Garnering popularity, Netflix continued to climb the ladder of success with nearly 7 million subscribers in 2007. However, with strong competitors like Blockbuster Inc. and Wal-Mart foraying into the DVD-by-mail territory, Netflix faced stiff competition in its own turf. Further, with Amazon.com and Apple Inc., raiding the rental industry with their movie downloading facility, the challenges for Netflix intensified. The growing piracy culture amongst the US consumers, raised questions on the company’s survival in the long run. These growing apprehensions also raised doubts on the long-term survival of Netflix. Will the intensifying competitive landscape force Netflix to bid farewell to its DVD-by-mail business model?

Pedagogical Objectives:

• To understand Netflix’ business model and the reasons behind Netflix’ success
• To analyse the competitive scenario in the US movie rental industry
• To explore the principles for lasting success and testing Netflix’ success against these principles
• To analyse what Netflix should do to survive and grow in the long run.

Keywords : Competitive strategy, Netflix, Niche Market, Business Model, Competition, Blockbuster, Price Wars, Amazon, DVDs by mail

Contents : 
Revolutionising the US Movie Rental Business
The Rising Trend of Watching Movies at Home in the US
The Rising Competitive Threat: Can Netflix Sustain the Pressure?
Evolution of the Netflix DVD Mailing Envelope
Blockbuster’s Free In-Store Rental Coupons