Netflix’s business model Essay

Analysis partQuestion 1In its competition with Netflix, where did Blockbuster go wrong? How was the use of client data a key differentiator? How might Blockbuster have better positi unrivalledd itself against Netflix?Answer3 things that Blockbuster goes wrong are1. Slow & hapless ResponseNo Late Fees program was misleadingTotal Access program was not well integrated customers had to maintain separate accounts for the Web-based system and the store.2. morphological IssuesStores were franchise-based and Web site was maintained by corporate Capex requirements for starting a separate Web-based logistics system to deliver DVDs by mail3. neediness of Information SystemsLack of knowledge about its customers preferences and behaviors Lack of an appropriate CRM systemQuestion 2What are the core competencies of Netflixs current trading model (primary DVD-by-mail with an online component)? Assess the quantify of Netflixs business as described in the caseAnswerCore competencies of Netflixs current business model1. Flexibility Subscription model no late fees Customers could rent and watch movies on their own schedules2. Selection and Logistics No visible stores Allowed deep selection in a wide variety of genres3. restroom Mail delivery obviated the need to drive to bricks-and-mortar stores Queuing system on Web site allowed customers to have a constant flow of movies4. Customer Insight Cinematch cooperative filtering algorithms aided the discovery process better customer experience Recommendation system and analytics allowed deeper understanding of customer trends, which let Netflix adapt better and more chop-chopQuestion 3What effects will the rise of the VOD market likely have on Netflixs business model? How does VOD threaten Netflixs business? What opportunities does it present?For opportunities, Netflix has ability to license its platform, be the benchmark in movie streaming and higher impact of Netflixs existing CRM system. Therefore, Netflix has to shift organizational nidus from logistic efficiency to technology excellence and need to invest in owning a platform to nominate the service In terms of threats, the current physical distribution channel will become a liability and competitors like Apple, which has the know-how to sell online and holds a huge customer database and brand equity, will become a threat. Then, Netflix need to shift investment from logistics to technology, continue to build the Netflix brand as an instant provider of movies from studios to customers homes and to invest in customer loyalty and CRM solutionsQuestion 4Which of Netflixs current competencies can it best leverage as a competitive advantage in VOD? Which might be liabilities (refer to the comparing value drivers in the Video Rental Market) Netflix has three core competencies to succeed in VOD market which are wide selection, brand equity and customer relationships and recommendation tool and customer knowledge. However, there are weaknesses for Net flix in moving toward VOD market, the warehouse and facilities and employee overhead will threaten Netflix in term of cost since Netflix will rely heavily on technology.Question 5What kind of partnerships should Netflix prioritize partnerships with discipline providers or with hardware/device manufacturers? Partnership Prioritization Parallel TrackingNetflix should not limit itself goal is to be a service provider, not a content producer or a hardware manufacturer. Dont compete in areas where Netflix is at psyche of parity compete where Netflix has advantages. Roll up Roku effort under umbrella of device partnerships devote resources across all initiatives evenly. Becoming the service provider and content recommender on all cable platforms is a top priority. Assume that movie studios and other content producers will want to distribute via Netflix it is in their best interest. 1) competitor between Netflix and Blockbuster(where Blockbuster goes wrong)The case revealed that in gene ral without doubt Netflix was much more stronger than Blockbuster. Netflix could carry a much larger quantity and mutation across genders and at the same time Blockbuster was constrained by physical limitations imposed by its bricks-and-mortar stores, generally limited its selection to mainstream titles. Furthermore, Blockbuster do very big inconvenience for the customers who wanted to keep the movies longer time (because it limited rentals from one to five days). Moreover, customers had to pay additional amount of money (a fee) if they returned a video late. Blockbusters pricing model meant the customers had to pay each time they rented a video, while Netflix charged a flat subscription and were allowed to rent one to five DVDs at one time with no limit on how many could be rented in a month or no collect date.Therefore, Netflixs pricing schemes gave customers a greater flexibility comparing with Blockbusters pricing which was not so attractive for current customers. Also, Block buster could not offer for its customers one of the main things in business world the flexibility , because it was constrained by inventory at its stores, but Netflix was strong enough to provide flexibility for customers. The problem was that main focus of a business model was based not on inventory warehouses what had negative effects for customers limiting them on keeping movies as long as they wanted to have them. However, no late fee program , the one Blockbuster was using, later, was also not so successful for the company as it was expected. And finally, the latest one,