Netflix Analysis

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Netflix Analysis 1 Netflix Analysis 2 History: Netflix.com, Inc was founded in 1997 by Reed Hastings and Marc Randolph (Mayfield 1). Initially, the Netflix business model was focused on being an internet based unlimited rental subscription serviced for digital video disc (DVD) formatted movies. In the late 1990’s, DVD’s were a newer technology and were rapidly replacing videocassettes as the primary vehicle for storing and playing movies. There are numerous reasons for the transition to DVD’s. First, DVD’s are smaller and easier to transport. Next, DVD’s provide image and sound quality vastly superior to those of videocassettes (Mayfield 1). Finally, according to Mayfield, DVD’s offered the additional advantage of “holding an entire feature-length film, as well as additional information such as subtitles in different languages, additional shorter videos about the making of the film or other related subject matter, and information about the actors, director and producers.” At this time, the Netflix business model focused exclusively on delivering DVD’s to customers via their website. According to Mayfield, this focus was a result of Randolph’s belief that consumers were often disenfranchised with the limited selections available and focus on new release movies at traditional “brick and mortar,” video stores. Netflix, with its virtually limitless “virtual,” shelf space, had no such limitations relative to variety and, instead, was able to focus on providing more content with an intelligent interface for helping customers browse and select potential films. Netflix experienced very rapid growth during their first few years in operation. According to Mayfield, revenues grew from $1.4 million in 1998 to $5.0 million in 1999 a growth of over 300%. The number of full time employees increased from 46 in December 1998 Netflix Analysis 3 to 270 in

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