Movie Rental Industry

Movie letting Industry Netflix and smash hit Case Analysis Lydia Floyd Strategic commission MGT422 February 28, 2013 Introduction Netflix competitive strategy In order for Netflix to understand were the condescension lies as it relates to the competition it is historic to put one overk the make better strategy in order to be and stay competitive. The five competitive strategies are * Low- Cost * Broad Differentiation * Best-Cost * think deferral found on kickoff cost * Focused niche establish on differentiation Since each strategy requires totally a different approached my recomm finisations get out be based on focussed niche based on differentiation.Netflix in the first place offered DVDs on a fee per DVD basis and eventually branched off into the monthly subscription religious service business. The company at one suggest was forecasted to have over 11. 3 cardinal subscribers by 2009 and 8 million VOD (Video on Demand) clients by 2013. (See Exhibit 1) This deliv er basically shows how the number of video streaming choices has change magnitude over the past several familys. So the company is moving in the practiced direction as far as broaden their differentiation strategy.The succeeding(a) exhibit shows how Netflix compares to the its main competition and how the companys net profit security deposit exceeds a competitor like Blockbuster. The attached devise analysis for Netflix mentions some very important points that are associated with a focused differentiation strategy. The company is staying committed to how to service the niche better than the competition and speaks to the areas that appeal to peculiar(prenominal) clients such as oblation go that allow subscribers to go back to wing episodes of a television series.This analysis will allow the company to identify areas to scale mow on strategicalally and to make a final diagnosis to where the company stands overall. Strengths * change magnitude competition per member vie wing is on the * Customers opting out is the lowest it has ever been. * Clearest blot identity Watch TV shows & adenine movies anytime, anywhere * Netflix has surpassed the competitions in improving personalization of customer choices because of large membership base * price $7. 99 per month * Exclusive confine Of Netflixs top ten TV shows, sextet are only on Netflix, and non available with competitors. Netflixs DVD subscription service is extremely profitable, with contribution margins around 50%. * function allow customers to go all the steering back to the beginning of the first moderate for TV shows Weaknesses * DVD subscriptions are down 8. 47 million subscribers in Q3, 2012 compared to 13. 81 million subscribers 1 year ago. * grade suffered when the company changed the pricing * It could take trey years for a full score recovery in order to see noticeable difference to profit margins * cyclosis subscription contribution margins are much Opportunities international expansion (global) * Original productions offer a way for the company to connect with customer emotions. Company will be offering 4 TV series this year that will only be on Netflix * Lack of use of debit and accredit cards Latin America. * Internet TV. Threats * As Hastings pointed out, With big commercialises comes competition thither is a clear transition from additive TV to Internet TV and competitors pauperism in on the profits. * Contracts with Disney, Sony, and Universal * Hulu, offers its customers TV shows immediately subsequently they are expose for the first time. Hulu, Amazon, and HBO competitors making more investments in streaming options * United Kingdom is a very competitive The sought after competitive advantage over different movie rental competitors was to deliver stimulate customer value and customer happiness by eliminating the hassle involved in choosing rent and returning movies. Grow front the company has 2 primary strategic objective 1 to continu e to create a large DVD subscription business and to expand rapidly to internet based delivery of content as that market segment developed. (Case page c-102) The companys revenue has continued to grow intimately over that last couple of years. The next exhibits show the financial position from the end of 2006 to end of 2008 going from 996,660 to 1,364,661 with the net income margin being at 6. 1% by 2008 which shows the company profitability as it relates to expenses and liabilities. The next two slides just give a visual for where Netflix compares to blockbuster as it relates to gross revenue thru 2010Reference Page Thompson , A. University of Alabama 2008 Case 5 Competition in the Movie Rental Industry in 2008 Neflix and Blockbuster combat for market leadership http//beta. fool. com/danielsparks/2012/10/31/netflix-swot-analysis/15522/ http//www. slideshare. net/only1kiku/techindnetflix Gamble, John E. , Strickland, A. J. , & Thompson, Arthur A. , 2010 Crafting and carrying into action Strategy McGraw Hill/ Irwin in the altogether York New York http//finance. yahoo. com/q? s=NFLX&ql=1