Netflix’s business model Essay

Analysis partQuestion 1In its competition with Netflix, where did smash hit go wrong? How was the use of guest info a key differentiator? How might Blockbuster cod interrupt positioned itself against Netflix?Answer3 things that Blockbuster goes wrong be1. Slow & lacking(predicate) ResponseNo Late Fees program was misleadingTotal gateway program was non well integrated customers had to maintain separate accounts for the Web-based dodge and the store.2. Structural IssuesStores were franchise-based and Web site was maintained by corporate Capex requirements for starting signal a separate Web-based logistics trunk to deliver DVDs by mail3. miss of Information SystemsLack of knowledge about its customers preferences and behaviors Lack of an appropriate CRM musical arrangementQuestion 2What are the core postu upstartncies of Netflixs period traffic model (primary DVD-by-mail with an online component)? Assess the value of Netflixs communication channel as depict in the caseAnswerCore competencies of Netflixs current business model1. Flexibility Subscription model no late fees Customers could rent and continue movies on their own schedules2. Selection and Logistics No physiologic stores Allowed deep picking in a wide variety of genres3. Convenience Mail pitching obviated the exact to drive to bricks-and-mortar stores Queuing system on Web site on the wholeowed customers to have a constant flow of movies4. Customer Insight Cinematch collaborative filtering algorithms aid the discovery process better customer experience Recommendation system and analytics allowed deeper understanding of customer trends, which let Netflix adapt better and to a greater extent right awayQuestion 3What effects result the rise of the VOD market apt(predicate) 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 st reaming and higher impact of Netflixs existing CRM system. Therefore, Netflix has to convert organizational focus from logistic efficiency to technology excellence and need to rank in owning a platform to provide the service In terms of threats, the current physical distribution channel give constrain 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 investing 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 word picture Rental Market) Netflix has three core competencies to succeed in VOD market which are wide selection, brand equity and custo mer relationships and recommendation tool and customer knowledge. However, there are weaknesses for Netflix in moving toward VOD market, the warehouse and facilities and employee overhead will threaten Netflix in term of cost since Netflix will rely severely on technology.Question 5What kind of partnerships should Netflix prioritize partnerships with center providers or with hardware/device manufacturers? Partnership Prioritization Parallel TrackingNetflix should not determine itself goal is to be a service provider, not a content producer or a hardware manufacturer. Dont compete in areas where Netflix is at point of parity compete where Netflix has advantages. Roll up Roku effort under umbrella of device partnerships devote resources crosswise all initiatives evenly. Becoming the service provider and content recommender on all blood 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) Competition between Netflix and Blockbuster(where Blockbuster goes wrong)The case revealed that in general without doubt Netflix was much more stronger than Blockbuster. Netflix could carry a much larger quantity and diversity across genders and at the same season Blockbuster was constrained by physical limitations imposed by its bricks-and-mortar stores, generally limited its selection to mainstream titles. Furthermore, Blockbuster make 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 throw 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 forthwith 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 due date.Therefore, Netflixs pricing schemes gave customers a g reater flexibility comparing with Blockbusters pricing which was not so attractive for current customers. Also, Blockbuster could not offer for its customers one of the main things in business world the flexibility , because it was constrained by enumeration at its stores, but Netflix was strong enough to provide flexibility for customers. The puzzle was that main focus of a business model was based not on inventory warehouses what had negative effects for customers limiting them on safekeeping 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,