NETFLIX:Leading With Data

The Emergence of Data-Driven Video

Analysis by:Stephanie Curry| MS5101

Business Intelligence

Describe the Netflix business model.

• Who are their three main customer groups? How do the differences in these groups affect the type of movies they want?

• What are the key strengths and weaknesses in their business model?

• How did their model differ from Blockbuster? If you were Blockbuster, how could you have responded?

1

Pick a subscriptionRanging from $4.99-$16.99

3

Get it when you want itfree delivery in around 1 business day.

5

Exchange movies from your queAll you have to do is return 1 to get one.

2

Create a movie queSelect from over 100,000

television and movie titles.

4

Keep as long as you likewith no late fees

Bonus Streaming**

Watch certain movies on your TV with internet at

anytime

NETFLIX BUSINESS MODEL

For the moviegoer who likes the convenience of free delivery

CONVENIENCE

➔ Getting movies they could keep as

long as they wanted

➔ Quick delivery service

For the movie enthusiast who likes a vast selection

SELECTION

➔ Flat rate subscription with no late

fees

➔ Able to rent up to 5 DVD’s at a time

➔ No limit to how many DVD’s could be

rented in a month

For the movie fan who gets a bargain and can watch 10 or movies for a flat monthly

fee

PRICE

➔ Wide selection of movie content

MAIN CUSTOMER GROUPS

NETFLIX WEAKNESSES

★ No actual retail locations★ Slow and cumbersome ★ Can’t just pick up a get a movie from the store★ Stiff competition for digital distribution★ Trying to build distribution with limited

bandwidth of home internet connections

NETFLIX STRENGTHS

★ Strong brand recognition ★ Flexibility ★ Exposure to broad range of movies★ Pricing★ Cinematch recommendation system★ No late fees

OVERALL SCOPE NETFLIX

❏ Pay-per-rent video model❏ Late fees incurred ❏ Sold video games and snacks❏ Brick and Mortar stores

*Where Blockbuster Failed*Reactionary response

Failure to innovate

First Blockbuster Opens

Blockbuster opens in Dallas

1985

Netflix is Founded

Founded by Reed Hastings

1998

Blockbuster makes a series of bad

decisions

Blockbuster continues reactionary decisions ultimately causing the company to go bankrupt (2010)

2002 and

Beyond

Blockbuster declines to buy Netflix

Opt instead to partner with Enron Broadcast Services

2002

Blockbuster VS. Netflix

❏ Home delivery video model❏ No late fees❏ No due dates

What would have Stephanie Curry CEO, Blockbuster done?

★ Stay with Blockbuster Total Access ★ Strengthen relations with content creators to garner exclusivity and premium content from Blockbuster only ★ Research the competition using data and analytics ★ Ask the consumers and get them to engage in the company but using social platforms.

Blockbuster VS. Netflix

2003

Netflix post first profit, earns $6.5 million on revenues of $272 million

2000

Blockbuster declines offer to acquire Netflix for $50 million

1998

Reed Hastings and Marc Rudolph found Netflix

1997

Reed Hastings returns Apollo 13 to Blockbuster six weeks overdue. Late

fees incurred $40

2007

Netflix delivers its one billionth DVD

WORK CITED

Satell, G. (2014, September 21). A Look Back At Why Blockbuster Really Failed And Why It Didn't Have To. Retrieved February 11, 2018, from https://www.forbes.com/sites/gregsatell/2014/09/05/a-look-back-at-why-blockbuster-really-failed-and-why-it-didnt-have-to/#2f2a6ac31d64

Walker, R., Jeffery, M., So, L., Sriram, S., Nathanson, J., Ferreira, J., & Feldmeier, J. (2010). Netflix Leading with Data: The Emergence of Data-Driven Video. doi:10.4135/9781473959972

Carr, A. (2012, July 30). Blockbuster Bankruptcy: A Decade of Decline. Retrieved February 11, 2018, from https://www.fastcompany.com/1690654/blockbuster-bankruptcy-decade-decline