Netflix Leading with Data: The Emergence of Data-Driven Video Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction

Netflix, a company, founded in 1998 and since its inception it has remained as a threat to the existing players in the market and changed the shape of the video rental industry. The abilities of Netflix that helped the company challenging some of the big players like Blockbuster, was eminent towards the success of the company. The company’s subscription model was the key in challenging the big players in the market. The company policy of no late fees and use of data analytics were the key points that gave the company authority to use consumer data and by leveraging that data to provide better and improved customer service and experience to the consumers with an additional benefit of generating e-commerce platforms.

Netflix invested heavily in techniques related to IT, data mining and collection in order to use to consumer data as a guide towards product development. These investments paid off, and the company enjoyed a sustainable success and growth for a considerable amount of time. By the year 2009, the company was able to overcome the competition from traditional brick and mortar stores and was enjoying the status of market leader in the video rental industry. The industry was growing, and the growth was attracting many new players which were a concerning factor for Netflix as it had to face direct and indirect competition. The new emerging trend of the digital media market was a serious threat to the growth of Netflix and was under serious consideration about overcoming this threat.

Problem statement

Netflix is facing trouble in retaining the consumer base and profit from the increasing threat from competitors in the market that is shifting from DVD to online. Netflix has enjoyed economies of scale in the video rental industry, but it has been under real threat and needs to find out ways to cope up with this increasing competition.

Analysis

The analysis portion will provide the CEO with a brief description about company’s strengths and weaknesses along with threats and opportunities. The industrial analysis will be supported by porter’s five forces.

SWOT

Strengths: The strengths of the company include its brand recognition, the subscription model of the company and customers’ satisfaction. These strengths are supported by the fact that the market leadership in the industry belongs to Netflix that further strengthen its position. Furthermore, the company’s flexibility and originality in content and affordable pricing offers width to the strengths of the company.

Weaknesses: The Company has some points that do not give a positive impact to the image of the company and are attributed as its weaknesses. These weaknesses include the subscription fee or to be precise the monthly fee are not preferred by the consumers, and any increase in the fee discourages new subscribers. In the DVD business, the company does not have control over the period of return that is attributed as a weakness of the company. The movies available for streaming are not many which is a discouraging factor for subscribers. Last but not the least the delivery method is not attractive as the DVD may reach the consumer in a broken shape.

Opportunities: Using the business model, the company can enter other related business by applying line extension strategy and enter the business of video and social games. Netflix can use the strategy of expanding globally, to offer the same products for the new markets or new products for new markets. Another opportunity that the company can use to sustain its growth is the option of strategic alliances with many platform developers and using the data analysis technique can build platforms for data management. Using their brand image can build strong marketing campaigns based on word of mouth thus decreasing the expense on marketing. The demand for online video streaming is growing which the company can utilize, providing high quality of services.

Threats: Strong competition in the DVD market from players like Blockbuster, Redbox etc. and besides that the growing trend of DVD industry and increasing trend of online streaming is also a threat. Piracy is another issue that has been a threat to the DVD industry since its inception. The online streaming market is huge and highly competitive. To compete in this industry, Netflix will have to start from scratch and will no longer be the market leader.

Porter’s Five Forces

Bargaining power of the buyer

The buyers can easily take the advantage of setting the prices due to the choice of availability and options in the market. In the current industry, the competitors are developing and distributing almost the similar content, and the aspect of product differentiation is invisible. This situation provides ...................

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By 2009, Netflix almost broke their traditional brick-and-mortar competitors in the video rental industry. Since its inception in the late 1990s, the company changed the face of the industry and threaten the existence of entrenched giants like Blockbuster, largely because of its easy to understand the subscription model, politicians no late fees, and use analytics to use data on clients to provide excellent customer service and increase their e-commerce media platform. Netflix investments in data collection and IT systems, and advanced analytics such as data mining their own methods and algorithms for the customers and products that meet played a crucial role in our strategy and success. However, the explosive growth of the digital media is a serious problem for businesses Netflix in the future. As her analyst, customer data, and model customer interaction play a role in the future of digital media space? Will she be able to withstand competition from the more experienced players in the SSL, such as Amazon and Apple? What position should take Netflix to successfully compete in the digital arena? "Hide
by Russell Walker, Mark Jeffrey, Linus Thus, Sripad Sriram, John Nathanson, João Ferreira, Julia Feldmeier Source: Kellogg School Management 19 pages. Publication Date: April 1, 2010. Prod. #: KEL473-PDF-ENG