Netflix Essay

635 Words3 Pages
Analysis of Netflix, Inc As of December 2, 2012 Prepared for: FIN326 - Managerial Finance Instructor: Dr. Charles Conrick [pic] Prepared by: Krystal Engel Dickinson State University Netflix was established in 1997 by Marc Randolph and Reed Hastings. Reed Hastings was inspired to start a company after being charged a late fee on a rental of Apollo 13 when he returned it after the due date. Netflix was then launched in 1998, in which they started out with a pay-per-rental model that followed the more traditional models that included a flat rate for the rental with shipping and late fees already included. In 1999, Netflix introduced the concept of monthly subscriptions which caused the company to drop the single-rental model shortly thereafter. With the monthly subscriptions concept, Netflix has continued to flourish with its reputation as the business with unlimited rentals, with no due dates, late fees, shipping and handling fees, or per title rental fees. Netflix sold 6,325,000 shares of common stock at a price of $15.00 USD per share in 2002 after initiating an initial public offering. Netflix posted profit during the 2003 fiscal year for the first time earning $6.5 million USD profit on revenues of $272 million. Netflix has a number of strengths which include delivering DVD’s straight to the consumer’s home, which is probably Netflix’s major strength as this one alone has made many large video store franchises topple. Netflix’s streaming capability is another strength of the company’s as it is available in many different formats which allows consumers to watch movies virtually anywhere. Netflix’s competitive prices, which are as little as $8.99 per month, allows consumers to watch an unlimited supply of movies whether it is via streaming or on DVDs. Netflix’s greatest weakness lies

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