CASE STUDY, Part 1 1. Briefly describe each of the four major challenges that Netflix faces. Which of these four challenges will be the most difficult to address? Why? Which challenge will be the easiest to address?
For the cinema market building something which can seat enough people with the right equipment (e.g. huge high definition screen with state of the art projectors) can be hard to create, due to high set up costs. Furthermore there is more to do, for example gain the rights to shoe new films, which can be very expensive unless you benefit from economies of scale. A natural barrier to entry is the exploitation of economies of scale, where the big firms in the business, in this case Vue, Cineworld and Odeon are using their economies of scale to deter any new entrant away. The top three firms have a relationship and power to obtain the viewing rights to screen 2”first-run” films and to do so at a lower price.
In my opinion it will be very hard to balance between the rights of both groups on this issue because there is people for it and people against it. I really don’t see the big problem. I know when peoples make movies that expect to make a big profit. Whether their is peoples who is buying the movies than making lots of copies than selling to peoples cheaper than the original cost of the movie. Nine times out of ten peoples gone go the cheaper way.
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.
As is stated in the article, the company used to have a major competitive advantage in terms of movie selection, where, “…customers could browse through thousands of titles…” (Hitt 106). Now, the entire scope of the market has changed and Blockbuster was much too slow to respond. The recent moves that it has made will surely generate profits, but not enough to sustain the company in the long run, seeing as there is nothing that differentiates Blockbuster’s services from that of its competitors. In order to fully gain lost market share back, the company would have to create some sort of highly innovative way of viewing or renting movies that none of its competitors has already thought of; It would have to be something that is rare, difficult to imitate, not easily substituted, and able to generate above-average returns. Unfortunately, at this point it looks as if none of this will come into fruition because Blockbuster has essentially decided to latch on to other companies, creating a sort of symbiotic relationship where the company feeds off of the success of its competitors.
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.
Lessens need to purchase “hard copy” of these. * Other competitors; Circuit City, CompUSA, Amazon.com, even Wal-Mart, Target, etc. * Possibility of losing customers to wholesale business. I think that for the most part Best Buy has lived up to their mission statement, because they are at the intersection of technology and life. I believe this to be true because they offer some of the newest technology in their store and it is place where people can actually interact with salespeople in real life.
Second, the system allows calculating which movies will be in demand. As customers add movies to their queue, Netflix can calculate demand of movies and improve their distribution and allocation of movies. Third and most important that has major impact is Netflix recommendation system called “Cinematch”. It allows
What competitive advantages is Netflix trying to achieve? Key Elements of Netflix Strategy ! Providing subscribers with a comprehensive selection of DVD titles ! Acquiring new content by building and maintaining mutually beneficial relationships with entertainment video providers. !
The studios will increase fees for licensing the content Netflix streams. The main reason why studios would do this is because they see Netflix as a threat to their industry. An increase in fees may not be too much harm for a company without a lot of overhead; however the threat of these studios refusing to license the content would be a major challenge to Netflix. Without proper licensing, Netflix would not be able to offer the