Netflix

Netflix versus Blockbuster versus Video-on-Demand

Netflix was founded in 1997 and started online subscription in 1999. It had attracted over 2 million subscribers in just four years. Netflix's strategy is to be the world largest and influential movie supplier by continuing to innovate and enhance consumer experiences, lead transition to high-definition DVDs then digital downloading and focus on rapid subscriber growth. This goal is to be achieved by Netflix providing expansive selection of DVDs, an easy way to choose movies, fast free delivery and create customer value by eliminating hassle involved in choosing, renting and returning movies.

Netflix has different rivals like Blockbuster, Movie Gallery and other online movie providers. Therefore Netflix has to choose a competitive advantage which is distinctive from its rivals. For them to gain their position in the market they have put the customer as first priority by offering hassle free services. Netflix prices are relatively lower as compared to its rivals and in addition to the low prices they offer a large variety of plans and movies creating more choices to the consumer. The have made their services so convenient especially in renting and returning the rented DVDs with features like no late fees, CineMatch technology, no due dates, postage-paid envelopes, information about the movie among others all of which have given Netflix a distinctive competitive advantage. Blockbuster as a rival is weaker because of offering a few plans to the customers and the failure of no late fee policy in December 2004 and January 2005.

Netflix performance shows a decline in profits in 2005. This decline was brought about by new entrant like Blockbuster in August 2004 forcing Netflix to adjust their subscription fees to compete, retain and attract more subscribers. Their profitability became better when Netflix partnered with Wal-Mart eliminating the competitive threat to the investors