For many years, the television was distributed by the broadcast wave, one of the revolutionary technologies which sends wireless signal over a huge swath of countries. The movie retail companies are the ones considered to rent Blu-Ray discs, video games and DVDs that are usable at the home-based electronic equipments (Hurni and Cooper 2015). There are many companies that have participated in this lucrative business and two among them are Netflix and Blockbuster. Both the companies are at present the leaders in the industry of retail movie and this is why they are also the major rivals of each other within the industry. This paper is focused on critically provide an in-depth analysis of Netflix with a focus on the Strategy in action and the strategic choice. It will provide a brief history of both the companies. The paper would further elaborate on analysing the reasons behind Netflix’s success towards beating the Blockbuster and how it would remain the dominant provider of the online video steaming in the coming years.
Blockbuster LLC was formerly known as Blockbuster Entertainment, Inc and Blockbuster Video. It was founded in the year 1982 by David Cook (Chopra and Veeraiyan 2017). It was founded with an aim to supply computer software services to the oil and gas industry of Texas. At first, it used to provide its service of video game rental and home movie in the American region alone through means of DVD by mail, video on demand, streaming, cinema theatre and video rental shops. The first store of Blockbuster was opened in the year 1985 in Texas (Dana 2017). The company has become globally known throughout the nineties. In the year 2004, the company was at its peak and it then employed around 8500 workers worldwide, comprising of 58,500 people from the United States and has more than 9,094 stores all total with 4,500 based in United States. However, the company has also experienced a demise in the after the emergence of Netflix’s mail order service, the video on demand services and the Redbox’s automated kioks. These were the major factors that have aided to the eventual demise of Blockbuster. From the year 2003 to 2005, it has lose about 75 percent of its total market values as because of the increase in competition from the companies Redbox and Netfllix (Wasko 2017). The company began to lose its significant revenue in the year 2008 and in the year 2010, Blockbuster was filed for the case of bamkruptcy protection. In 2011, the remaining stores of it, i.e., 1700 stores were sold by it to Dish Network, the well-known satellite television provider. Although, Blockbuster has mostly retired in the current years, Dish has still remained and maintained a small number of franchise agreements of Blockbuster that allows some of the prevailing stores open in certain markets.
At present, Netflix is considered to be the largest online entertainment subscription service in the world (Sherman and Waterman 2016). It is an entertainment company of America which provides video on demand, DVD through mail and streaming media. It was founded by Marc Randolph and Reed Hastings in the year 1997 in Scotts Valley of California. The company is headquartered in Los Gatos of California. In the year 2013, the company has expanded into television and film production along with online distribution as well. The initial business model of the company comprised of rental and DVD sales. In the year 2007, the company expanded its business by introducing streaming media along with retaining the Blu-Ray and DVD rental service. It expanded globally with its streaming that it made available in Canada at the very first in the year 2010 and since then it continued growing its streaming services from there itself. Furthermore, in the year 2010, Netflix entered into the industry of content-production while debuting its very first series called the ‘Lilyhammer’. By 2016, the services of the company started operating in more than 190 nations except Crimes, Syria, Mainland China and North Korea (Notteboom and Yang 2017). It released a total of approximately 126 original films during this year which was more than any other cable channel in the world. According to the data of 2018, the company has 125 million of subscribers in the entire world inclusive of 56.71 million of subscribers in the United States alone (Edwards 2016). At present it has its offices in many places including India, Japan, South Korea and Brazil. Hence, it is to state that, with very small period of time, Netflix has grown tremendously since its emergence and it has now developed into one of the largest companies of 21st century. Both the movie titles and the revenues of the company have increased significantly over the last five years.
Digitalisation has affected each and every company in the recent years. It has forced every company to digitally transform themselves and Netflix is one of the best examples of evolution of company (Leeflang et al. 2014). With the passage of time, technology has changed tremendously and Netflix as an entertainment service provider has evolved and has always adapted itself with the changing nature of the market. When customers started demanding to get access via internet, the company has developed an innovative game plan in order to cover that demand of its subscribers. In the year 206, it had introduced its first online service and when the market of DVDs began to shrink, Netflix continued to grow with a fast pace. The widespread use of WEB 2.0 and internet have greatly changed the habits of the people, particularly the television networks were drastically affected due to this change (Xiang, Magnini and Fesenmaier 2015). However, Netflix kept on increasing gradually its online library in order to satisfy its customers, especially the online subscribers through providing them much better services. In the year 2008, the company has also reached to an agreement with the Startz Entertainment and in 2010 it collaborated with MGM, Lions Gate Entertainment and Paramount Pictures that have helped it to grow even further (Meehan 2016). The company has contrasted a very successful business model with its rental service but with the passage of time, they have anticipated the changes in consumer behaviour and in the changed business model. At the height of content marketing Netflix and social media, once again evolved and started in order to produce its own shows and movies (Zhao 2016). At present, the company is digital disruption and it is a level that can be managed to reach only by a few companies.
The second part of the technology strategy of Netflix was to elude the burden of the retail outlets through operating online. It has become one of the virtual organisations with only few offices and warehouse that has no retail stores and any sales employees. Small staffs operate on what Hastings calls their “Freedom and Responsibility Culture” (Halal 2015) Instead of the sick days, fixed work hours and authorized vacations, people work when they choose as long as their job gets done. Both the compensation and titles are up to the individuals. The company has also developed its on-demand offering for its subscribers comprising of the converters which allow the streaming of the shows straight to the television. On the other hand, Blockbuster was an upstart since its emergence in 1985. Eventually it became the biggest video rental company in the entire world. Although it was swelling in terms of size, the company began to detach its customers with strong late fees along with unimaginative warehouse style of stores. The company has also ignored the e-commerce and was sticked to its old retail strategy. One of the cardinal sins of Blockbuster was to maintain its commitment to a wide range of retail network while knowing well that it was no longer desired by the movie renters.
One of the new pricing strategies of Netflix is that it has split its pricing model into two different options. First is to continue with its former model where the subscribers would get unlimited streaming with the service of DVD-rentals and also has added new option to it like- it would give them unlimited movie streaming without any option of DVD rental as well. The option of unlimited streaming only is preferred by the company for delivering television movies and shows costs 7.99 dollars per month. Apparently, the unlimited streaming with DVD rental options costs between the price ranges of 9.99 dollars to 41.99 dollars per month (Khana 2017). However, this option depends on the total number of rented DVDs. The old pricing strategy of Netflix used to start from 9.99 dollars per month. Hence, the new model represents a decrease of 2 dollars on a monthly basis.
Netflix enables all its subscribers to stream the content on the basis of on-demand from any part of the world and at any time as long as they have appropriate device and internet connection to do the same. It is very convenient because of the fact that here, the customers do not need any access to television to get access to the library of Netflix and to consume their content.
With the same, at present Netflix thrives on developing and producing their own original content that is an endeavour which began in the year 2013 along with globally acclaimed series of “House of Cards” (Cross 2016). It is something that is ultimately allowing the company to have its own place and voice in the entertainment industry as content creator rather than just a mere licensing machine. With the same, the company also releases its original content all at once which is further making its entire season of series that is available for subscribing to binge-watch it at the company’s very own pace rather than having to wait for weeks for a new episodes as it occurs on the traditional television. With the same, the company has also added a new feature to its portfolio which was long been waited for. It is that of the ability to stream the content offline. The subscribers are now able to download their favourite episodes or movies that they would want to watch later when they do not have any access to internet. It is one of the most significant changes to mention as because of the fact that it gave the subscribers of the company the power to use the services of Netflix regardless of the accessibility to internet. The company also offers its services and products at very affordable and reasonable price. Customers can also choose their plan based on their needs and wants and that they consider to best fit their requirements. Overall, the average subscription price for Netflix is about 10 dollars.
In the year 2011, Netflix announced about the demise of Qwister. Although the increased price was still present in places but there was not more separate websites, services and accounts for streaming the DVDs and movies since then. Instead of that, the company added more number of new movies to its movie catalogue along with thousands of television episodes. It was indeed a good move as if Qwikster was not demised; it would have now become a primary name identity liability as well as a branding nightmare for the company. This is because, creating a divisional identity and spinoffs of the divestures and operations, everything needs very delicate understanding of the concept of corporate nomenclature. It is really very easy to find name quicker than to disrupt the perceptions of human and influence their nature side of the name usability. However, Quikster did not work for many reasons like that of the name change, the hike in price, the website split and the assumptions of the company and the people that the mail orders were being put on backburner to focus on something which was not there yet (Hallinan and Striphas 2016). It was assumed that Qwikster would force the users of Netflix with DVD subscriptions and streaming for creating a separate account for managing both of them but the websites would not be combined in any way that would mean different bills, separate preferences, separate ratings for the Qwikster and Netflix, instead of being possessed by the same company. Hence, it is to state that the major reason behind the fail of Qickster was its name. The new users of it might not recognise Netflix and Quikster are owned by same a same company which would lead the subscribers to choose a different mailing service. It would further led Netflix to lose its millions of potential customers.
Content marketing has dominated our lives with the passage of time. Personal advertisements are no longer any scene from the Minority Report movie. Every day more and more companies are gradually focusing on the content marketing and now it is considered to be the future of the marketing. There has been a growing importance of original content by the year 2017. It was gaining a great momentum among the customers as a primary reason for paying for the streaming video. It was more of a priority among the streaming enthusiasts. Therefore, Netflix decided to create its own content. Instead of beginning from the scratch, it bought licenses of the cancelled television shows such as Arrested Development. However, when comes to the question of content marketing, people disliked the concept of copy paste contents as they need something original and unique and this is what Netflix did. Netflix started producing very unique television shows and further brought different perspective for genre like that of the superhero TV shows that were widely available on the traditional television networks. Gradually, the company started producing some of the most popular series like Jessica, Narcos, Daredevil and Jones (Strott 2015). All these are the original Netflix and the company also started to continue this original strategy of theirs and gained love. The company also produced an original movie named- Beasts of No Nation is a huge success. It is considered to be the very first global television network that is at present, present at 190 different countries as of the statistics of 2016.
It is to mention that Netflix would probably experience immense growth in the coming years and the primary reason for this is their amazing business model.
The fundamental aspect of business of Netflix is to pay attention to the preferences of their customers. It allows all its customers for creating their own list, choosing the series and films based on their own individual tastes while the Netflix site itself suggests further options depending on the previous choices. For example, watching a Batman movie would lead the site to recommend more options of superhero based movies and series and the user reviews would further help in dictating what the Netflix suggests. Tracking the preferences of the subscribers and their choices helps in encouraging more personal experience that would further reinforce the brand-loyalty and helps the subscribers in feeling more important and valued (Tao and Xu 2018). Hence, it is to sate that the experiment of Netflix as a global subscriber funded TV portal might be the upcoming chapter of the history of television.
Conclusion
From the above analysis, it is to state that Netflix is far more than just steps ahead of the company- Blockbuster. In just a decade, the company has grown tremendously from a mere video service provider with 7 million United States’ subscribers to the one that reaches 93 million people around the world. No cable provider has ever been potentially reached such a truly global audience like that has Netflix with such a short period of time. From the viewer’s point of view, it is bound to take place different and diverse preferences towards a particular service. It highly depends upon the needs of the service members. Netflix is successful in fulfilling the needs of all its customers and it creates its value through differentiating itself in between their competitors, particularly the Blockbuster. The outstanding systems of it make itself accounted the most of the market share in the retail movie industry. It has engaged in partnership with other different countries and has developed VOD system as well in order to increase the amount of subscribers of it. The company has also introduced a wide range of flexible services that differ in both content and price. However, the company is not satisfied with its current succeed and it is still working hard to develop its technologies to give better experience to all its subscribers.
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