Netflix Strategy, Integration and Threats
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Changing technology and shifting customer preferences with respect to movie distribution led to the demise of Blockbuster Video. Meanwhile, Netflix grew to become the top rent-by-mail and video streaming company, while other strong competitors emerged to dominate movie distribution via kiosks (Redbox) and online (Apple, Amazon, Hulu, and others). Looking to the future, Netflix's survival depends on its ability to adapt to and adopt new technology and marketing practices—issues Blockbuster failed to navigate due to its reactive, rather than proactive, stance toward a rapidly changing market. 1. As the use of DVDs declines and streaming continues to grow, Netflix faces a somewhat uncertain future. What strategic changes will Netflix have to make to remain competitive in the future? 2. From a supply chain perspective, Netflix will always be somewhat vulnerable because it does not own/control the source of supply (movies). How can Netflix insulate itself from this threat to its existence? 3. Many have argued that Netflix must more vertically integrate its operations in order to be viable in the future. This means acquiring sources of supply (movies, movie studios) or other avenues for distribution (kiosks, TV or cable networks, wireless providers). Prepare a list of pros and cons related to various integration options that Netflix could pursue.
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Solution Summary
Strategic recommendations for Netflix is determined. Integration and threats are examined.
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NETFLIX
What strategic changes will Netflix have to make to remain competitive in the future?
Geographic expansion: Netflix would need to stay on top of changes in population demographics and innovate in order to remain relevant to customers. Netflix can grow in markets where it has no or low penetration.
Get involved in auctions for content: Netflix should get involved in bidding for specific movie output deals with major studios like Universal and Fox and also bid for original products.
Create unique content: Netflix should consider exclusivity of content, whether the content is produced in-house or licensed from suppliers.
Co-exist with ISPs/MVPDs: Netflix should co-exist with ISPs and MPVDs rather than become a substitute.
Internet TV apps: Internet TV is fast replacing linear TV and Netflix should lead the way and drive improvements. It is an opportunity for Netflix to build large-scale ...
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