Netflix Case Study PDF

Jack DeWeese
1. Identify and describe the differences between Blockbuster's and Netflix's business models?
Netflix provided an online DVD renting business without a physical shop. Launched in
1998, the firm concentrated on early adopters and supplied solely the DVD format, despite the
fact that the VHS tape was popular at the time. The universal popularity of the DVD format was
both an assumption and a risk for Netflix's business plan. Users could browse the library and
choose the appropriate book. Blockbuster charged between $3 and $4 for each rental for a set
period of time. If the title was not returned within the specified time frame, the client was
charged late costs. The "late fees" accounted for more than 10% of blockbuster income. Only
the most popular titles (most of which were recent) were supplied. It was difficult to find ancient,
obscure, or independent films at the store. The economics of showing lesser-known films were
unfavorable. Blockbuster's expansion strategy was built on the addition of new outlets in order
to broaden geographic coverage and increase market share.
2. Was Netflix disruptive in its approach? If so, how? If not, what did they do instead?
Netflix was disruptive in its approach however, it was reasonable. Technology changes
fast and in order to keep up with the technological curve Netflix incorporated an online, prepaid
video streaming service. Netflix began as a website where individuals could rent DVDs through
the mail, competing with Blockbuster and other brick-and-mortar movie rental stores. It
innovated in its early days as a postal service by adopting new alternatives when they became
available, such as express mail. Netflix became the digital disruptor it is today as a result of this
willingness. Netflix jumped on board with the rise of online streaming and was able to oust
traditional movie theaters from the game thanks to a larger selection, all-you-can-watch,
convenient, and low-cost approach.
3. Did Reed Hastings make the right move in trying to separate the DVD-by-mail business from
the streaming business?
I think separating the DVD-by-mail business from the streaming business was one of the
best decisions for Netflix. They can focus on their two very distinct businesses and build the
correct strategies for each by establishing two independent firms, each with its own CEO and
staff. The Qwikster team has no excuses for failing to meet their targets, and they can't claim
that their resources are being diverted to streaming ventures. Qwickster's executives must
continue to market the DVD industry's virtues, the most significant of which is the considerably
larger library than the streaming business. Similarly, the streaming industry must speed up
content acquisition, focus on customer retention, enhance streaming technology to make it
better for consumers / worse for rivals, and constantly improve the user interface.
4. What recommendations for strategy would you provide Netflix moving forward and why?
Netflix is a corporation that is attempting to succeed in digital transformation and is

already giving Blockbuster and HBO a run for their money. The company is transitioning from a
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traditional business strategy to a subscription-based business model. It began as a DVD rental
business and subsequently evolved into a streaming video service. Original content or other
subscription packages are believed to be one of the most effective ways to acquire clients' trust
and build a large customer base. Netflix could incorporate more variable pricing within their
subscription service allowing for a larger market to access their content.
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Jack DeWeese

Netflix is a corporation that is attempting to succeed in digital transformation and is

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