Blockbuster vs. Netflix case study
Speaking of large modern multimedia companies, it is necessary to allocate Netflix as one of the largest suppliers of films and serials in the world. Its audience in 2014 reached the mark of 50 million users. Many leading publications call Netflix the most successful distributor of streaming multi media in history.
Searching for a Niche
The company was founded in 1997 by Reed Hastings and Mark Randolph.
They noticed in the video distribution market a free niche associated with the inconvenience of existing salons and services. Thinking about this, the future founders of Netflix set about creating a more convenient method for renting movies and TV shows. The model of the work was built in such a way that a person could rent a movie without going to the store or office. Everything was easy to make out with the help of mail and bank payments. The cost of one week was $4.
Thus, Netflix case study Harvard can be made from the position of searching for an unoccupied place and developing a new model of service, which would be more convenient to customers.
Blockbuster vs. Netflix
There were several major competitors on the market, among which was the Blockbuster network with annual revenues of up to $ 5 billion. They have not worked online yet, but they could start and easily destroy a start-up business.
Hastings understood that in such conditions it is necessary to act quickly. To attract the audience to the site, the founders began to create special promotions for users. In the first year of work, a trip to Los Angeles was donated to a random customer, and those who rented more than two disks received a discount of 30%. Blockbuster vs. Netflix case study shows how to bypass the main competitor in the short term and grow own audience simultaneously.
In the same way, one more problem of the company in the first year of existence was solved – a low percentage of DVD users. As a result, the company went the favorite way of providing bonuses to clients. For this, an agreement was concluded with the Japanese company Toshiba: every buyer of its players in the US received a free rental of three disks. So the company increased not only the number of DVD users but also its own audience.
This unique business can also be learned. It represents a mutually beneficial bilateral deal, each side of which only wins.
At the beginning of its history, the company had to face several problems that could destroy it. One of them was the delivery of disks intact and secure with the help of mail. All the mail was sorted by special machines, working with a huge number of letters, and after this sorting, the disk would be damaged. Therefore, Netflix was faced with the necessity to develop a solution on how to save its product.
The development of a unique envelope began, and about 150 versions of different materials were created. They stopped on a version of the thick paper with a special partition, which protected the disk from damage. This solution shows how a company may act in conditions that cannot be changed but only adopted.
Following IT Trends
Based on the feedback from customers, the scheme of the service was gradually changed. Instead of a weekly lease, a one-month lease was introduced, while the company continued to offer its customers a variety of discounts. Everyone can take 4 DVDs for only $15.
95 for a month.Gradually, a new service option is gaining momentum – an online subscription developed in 1999. Initially, its cost was $ 19.95 per month for four drives, while there were no time limits and the user could take the discs for at least a year. For new customers, there was a trial subscription for six days.
This Netflix case study solution can be researched from the perspective of an adaptation of the business to changing conditions, following trends, the correct definition of the needs of consumers and the formation of a demanded proposal, combining all this with pleasant bonuses and opportunities to test the service.In 2007, Netflix began to distribute streaming video, which turned it into one of the largest companies in the world. The transition to the new model was due to the fact that Hastings understood: DVD is not the only way to distribute content, and with the advent of cloud services, most of the information has been stored on the Internet. There was a new niche that his company could fill. The founders of the company second time caught the current trend and were able to infiltrate into a virtually empty niche.
Also read Netflix (Management of Innovation Case)