MASTER’S DEGREE PROGRAMME IN INOVATION MANAGEMENT AND

ENTREPRENEURSHIP

Student: Georgakaki Konstantina..........................................................................................

Module: IME52

WA: SWA1

Class: New Venture Creation and Business Planning...........................................................

Tutor: Ioannis Vikas..............................................................................................................

Academic year: 2022-2023....................................................................................................

Contents

1. Question 1.......................................................................................................................2

2. Question 2.......................................................................................................................3

References..................................................................................................................................4

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1. Question 1

Netflix was founded in 1997, by Marc Randolph and Reed Hastings. They came up

with the idea of starting the service of offering online movie rentals. After significant

growth and during the rise of a new digital era, they decided to switch to a subscriber-

based model. By 2007 the company decided to move away from its original core

business model of DVDs by introducing video on demand via the internet. Today

Netflix is one of the largest and most successful internet companies in the world,

offering the ability to stream and watch a variety of TV shows, movies, and

documentaries through its software applications. (Menghani, n.d.)

Regarding the change that Netflix’s founders decided to make in 2007, Netflix took a

significant business opportunity by transitioning from a DVD rental service to an

online streaming platform. This transition allowed Netflix to expand its reach beyond

the United States, where it had primarily focused on DVD rentals, and tap into a

rapidly growing global market for streaming content. (Menghani, n.d.)

By providing a various library of TV shows, movies, and other content that users

could watch on-demand, Netflix disrupted the traditional TV and movie industry and

transformed the way people consume entertainment. This move allowed Netflix to

differentiate itself from competitors and provide users with a more personalized and

engaging experience.

One of the key factors that contributed to the success of Netflix's business opportunity

was its investment in developing a sophisticated recommendation algorithm that uses

data analysis to suggest content to users based on their viewing history and

preferences. This personalized approach enhanced the value proposition of Netflix by

providing users with a customized and engaging experience that kept them coming

back to the platform.

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Furthermore, Netflix's decision to produce original content was another significant

business opportunity that has paid off handsomely. By producing its own content,

Netflix has been able to differentiate itself from competitors, offer exclusive content

to its users, and create a powerful incentive for customers to remain loyal to the

platform and continue their subscriptions.

Netflix took a strong business opportunity after 2007, as it met various evaluation

criteria. First of all, the shift to online streaming provided Netflix with access to a

much larger global market for entertainment, as compared to its earlier focus on the

US market for DVD rentals. The potential for growth in the streaming market was

significant, as more and more people began to consume media on digital platforms. In

fact, Netflix found a market potential. (Business 2 Community, 2022)

A second evaluation criterion we can recognize, is the competitive advantage. (Dave

Chaffey) By developing Netflix, a recommendation algorithm and producing original

content gave it a significant competitive advantage over other streaming services. This

allowed Netflix to offer a personalized experience to users and differentiate itself

from competitors, making it more attractive to customers.

Another evaluation criterion is company’s financial viability. The online streaming

business model allowed Netflix to reduce costs associated with DVD rentals, such as

physical inventory and shipping, and generate recurring revenue through monthly

subscriptions.

Last but not least, Netflix’s strategic alignment allowed them to move to online

streaming with Netflix's long-term strategic goals, as it allowed the company to

expand its reach, differentiate itself from competitors, and create a strong brand

identity. The decision to produce original content also aligned with the company's

strategy of offering exclusive and personalized content to its users. (Dave Chaffey)

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Based on these criteria, it is clear that the business opportunity that Netflix took after

2007 was a really strong one. The market potential was significant, the company had a

competitive advantage through its recommendation algorithm and financially viable,

and it seems that it was aligned with Netflix's long-term strategic goals.

2. Question 2

Regarding the value proposition of Netflix, it has evolved over time as the company

has gone through different stages of development. The two main periods in the

company's history are the DVD period and the online period.

During the DVD period, Netflix's value proposition was centered around providing an

easy and convenient way for customers to rent and watch movies. The company's

main value propositions were various during this period. First of all, Netflix had a

large inventory of movies available for rent, which meant that customers had access to

a wide variety of films to choose from.

Secondly, Netflix did not charge late fees. This was a major selling point for

customers who did not have to worry about rushing to return the DVD to the store

before the due date.

Netflix offered also during the DVD period, monthly subscription. This was a major

value proposition because it eliminated the need for customers to pay for individual

rentals and gave them the ability to watch as many movies as they wanted without

worrying about additional charges.

Regarding the online period of Netflix, the company’s value proposition has shifted to

focus on providing customers with a seamless and personalized streaming experience.

First of all, Netflix offered unlimited streaming of movies and TV shows for a fixed

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monthly fee. As a result, the customers no longer have to worry about renting DVDs

or returning them on time.

Secondly, Netflix has invested heavily in creating its own original content, which is

only available on the platform. This gives customers a unique value proposition

because they can access content that is not available anywhere else.

Last but not least, Netflix uses advanced algorithms to analyze customer viewing

habits and recommend content that is tailored to their interests. This is a major value

proposition because it helps customers to discover new content that they might not

have found otherwise.

Overall, the value proposition of Netflix has changed significantly over time as the

company has adapted to new technologies and changing consumer preferences. From

a convenient DVD rental service to a personalized online streaming platform and now

a producer of original content, Netflix has continued to innovate and evolve its value

proposition to stay competitive in a rapidly changing market.

References

Business 2 Community. (2022, November 9). Ανάκτηση από

https://www.business2community.com/strategy/5-factors-use-evaluating-business-
opportunity-02011996
Dave Chaffey, F. E.-C. (χ.χ.). Ανάκτηση από Internet Marketing, Strategy, Implementation & Practice:
https://books.google.gr/books?
hl=en&lr=&id=HcoRl2EZXiwC&oi=fnd&pg=PR13&dq=marketing+strategy+evaluation&ots
=4WdrBd8G3s&sig=miCyWSkZTaicAwbe42DwZoRmVN8&redir_esc=y#v=onepage&q=m
arketing%20strategy%20evaluation&f=false
Menghani, T. (χ.χ.). The Marcom Avenue. Ανάκτηση από https://www.themarcomavenue.com/blog/a-
case-study-on-netflixs-marketing-strategies-tactics/

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