However, couple of years after its inception Netflix introduced a monthly subscription model of flat fee where users can go for unlimited DVD rentals without due dates, late fees, shipping or handling fees, or per title rental fees. The nature of subscription will determine simultaneous DVDs that a user can rent at a time. This model allows users to watch movies as per convenience without the pressure of returning movies till they are ready to watch the next one. For Netflix it means a continuous and steady rental and revenues and a great way to decrease idle shelftime for their movies. The subscription system of Netflix is a web-based system that allows customers to order DVD online using a web service that quickly delivers by mail movies they can keep as long as they want.
Moreover, the convenience of locations saves customers’ time, energy and money, taking into consideration that the rental fee of Redbox is “dirt cheap.” Through its successful strategy execution, in 2010 Redbox had 22,400 vending kiosks in the United States, Puerto Rico and United Kingdom. Redbox has rented over 1 billion DVDs. It processed 80 rental transactions per second and generated revenue of $773.5 million from rental sales, which is 16.8 percent of DVD rental market in the United States. To sum up, the success of Redbox strategy is centered on five main elements: 1. Low price: Its’ $1 per day rental price is considerably cheaper than the $4.5 rental fee charged by rental movie stores.
Knowing that one of the basic assumptions about market participants is goal-oriented behavior, where the users are interested in fulfilling their personal goal; this is a good call. In addition the Netflix’s rent available title service is beneficial to the revenue growth. • Revenue sharing- the retailer pays a lower price for each DVD in exchange for sharing a portion of the rental revenue with the movie studio. • Video-on-demand- it allows home consumers to directly access movies via direct download and/or through online and digital subscriber services (like, satellite TV, cable TV, etc.). • Marquee Program base on pre-selecting four DVDs, with no late fees or due dates.
In the past visiting a video rental store and spending time browsing the categories and titles was the norm and almost ritual for some households. The video rental industry was booming with thousands of customers from the home video days to the more recent DVD and Blu-Ray offerings. As time went on, movie rental companies would offer longer rental times as the price of rentals began to rise. This enticed many consumers being that busy schedules needed to be manipulated to return videos on time and avoid late fees. At the height of the movie rental industry revenues hit $11.6 billion (“Video Tape Rental” 2012).
Viacom is leader in entertainment media operating in cable and other pay television services industry as well as in motion picture and video tape production industry. It comprises many popular TV networks as MTV, BET, Comedy Central and may other, also on the film production- Paramount Pictures. Viacom's content reaches over 520 million households worldwide in over 160 countries and territories. Problem: The main problem is increase portion of digital media, which allow access entertainment in new ways and greater speed, that therefore decrease the portion and revenues of film and media market, more worth is makes using piracy content. To analyze company I will use SWOT analysis to analyze internal (strengths & weaknesses) and external (opportunities & threats) environments: Strengths * Strong brand recognition- allready 578 million viewers across 162countries.
They assumed that unlimited streaming service had more demand than DVD service. Before Netflix changed its pricing structure, the customers paid $7.99 per month for unlimited online streaming plan, or an additional $2 per month for the DVD-by-mail service. So the total cost for the user who wish to use both service unlimited online streaming and the DVD-by-email was $9.99 per month. However, this pricing was not financially sensible for the company because of the misconception of the demand of DVD rental service. Therefore, Netflix set the price $7.99 for both service unlimited online movies and unlimited mail-order DVDs respectively.
3. How does Netflix’s approach to relationship marketing increase customer satisfaction? C en ga SOURCES: Jena McGregor, “At Netflix, the Secret Sauce is Software,” Fast Company, December 2005, 48–51; Jennifer Netherby, “Netflix Delivers Big Earnings Increase: Sets 5.9 Million Subs as Modest 2006 Goal,” Video Business, January 30, 2006, 1; Steven Zeitchnik, “Download Dreams: Netflix Eager to Expand Online Efforts,” Daily Variety, January 25, 2006, 5; Jennifer Moeller, “You’ve Got (Movies in the) Mail,” The Christian Science Monitor, December 2, 2005, 15; Ben Fritz, “Freaky Disc Biz: Netflix Grows at Blockbuster’s Expense,” Daily Variety, October 20, 2005, 1; “All Queued Up: How the Netflix Distribution Network Supports the Company’s Business Model,” Material Handling Management, November 2005, 9. er of ty ge Le ar ni ng Shocked at the $40 fee he incurred for a late return of Apollo 13, Netflix founder Reed Hastings decided that in the age of the Internet, there had to be a better way to rent videos for home viewing. Thus, in 1997, he started an Internetbased, DVD rental service that offered direct-to-home deliveries with no late fees. A mere decade and 4 million subscribers later, Netflix has taken on established video rental companies such as Blockbuster, Hollywood Video, and Wal-Mart and emerged as the leader in innovation and customer service.
Push and Pushback in Streaming Video 1. a. Fostering deployment of technology that enables user-friendly, ease of access to the Netflix streaming service. b. Initiative of Netflix to get into original programming. c. Growing competitions from businesses such as Amazon.com, allow people to stream videos at no charge. d. Fees that studios charge Netflix for access to the studios’ content.
Alexander Johnson English 100 March 29 2013 Professor Dellasanta Movie Cinema and Netflix Online There are different ways to experience a movie but two of them are almost alike, Netflix and Cinemas. The Movie Cinemas are too costly,and Netflix is an at home movie theatre experience that is cheaper. The Movie theaters cost per each movie while netflix you can pay one month of and get all the recent movies that just came out on dvd and television shows you might have missed. As the whole movie theatre experience goes you can basically get that at home with netflix but you just have to connect to a television or a projector. The reliability of a movie loading at home on a laptop or computer is faster and you do not have to wait for the previews to end.
This system is based on customer rental history and the ratings the customers provide to Netflix. The ratings system is a simple 5 star system where 1 star is equal to a bad movie and 5 stars is equal to an excellent movie. Strategy Netflix's strategy can be seen in their actions in the marketplace. Online enterprises must attract customers on more than just cost, so Netflix will out compete rivals by being the best-cost provider. Netflix will give customers more value for the money.