Netflix Case Study

Problem Statement: Netflix is losing

market share and profitability to competitors and technological advances.

Scenario: Netflix is feeling competitive pressure from larger companies with what seems like limitless resources; namely, Wal-Mart, Disney and Blockbuster Video. Not only is the pressure being felt from competitors, but also the pressure is being felt from the evolving entertainment industry itself. Technology is allowing consumers to obtain media in different ways; such as direct downloads vs. the mail order system Netflix uses.

Analysis: SWOT

Strengths

* Pioneer in online DVD rentals, which built brand loyalty/recognition

* Patent protection for much of its business model. This can provide an additional revenue stream for Netflix if it considers licensing some of the parts.

* Access to over 55,000 titles (www.netflix.com), which offers the most options to its customers as compared to competitors.

* Can reach the majority of its customers within one business day.

* Does not have overhead associated with traditional brick and mortar competitors

* Netflix's CineMatch technology enables it to match customer's likes/dislikes with movies by making recommendations based on collected data/previous renting habits.

* Subscriber base of over 1 million.

* Four different subscription choices to better serve various movie-watching habits.

* Customer satisfaction is high, 9 out of 10 customers would recommend the service to friends and family.

* There are no late fees/shipping charges to the customer.

Weaknesses

* Cannot reach those not connected to the Internet.

* Limited number of DVDs are allowed per customer at one time