Netflix is one of the biggest media company in the United States that offers services such as streaming media, DVD by mail, and video-on-demand online. Netflix started marketplace battles with Blockbuster in the 1990s. The rise of Netflix had led to the ultimate fall of Blockbuster. At this time, Blockbuster had the largest DVD rental store were over the country. Blockbuster also was the major household name for the movies found in the United States (Almeida, 2011). Blockbuster made a lot of investments in the inventory of all its stores, and made profit when a customer rented a movie (Dana Jr, 2017). Customers had to watch the movies quickly and return them quickly so that other customers could rent the same movies and use them. It was after a long time that blockbuster realized its customers did not like the trend of returning the movies quickly and thus led to the increase of the late fees and most of the profits estimating to 70 percent came from these fees (Wooldridge, Matulich & Riddick Jr, 2007).
However, with the emergence of Netflix in the year 1990, came with a different method where it introduced a subscription fee which was to be paid monthly in order to avoid the hassle of the late fees as Blockbuster had made people to pay for late returning of the movies. The pay made every month was made with a few dollars but one could order many DVD’s as they could (Burroughs, 2018). With this, some of the users borrowed one or more movies each month but they were to pay the same fees of subscription per month.
Blockbuster is one of the major home video and movie media company which offers the rental services of the movies and videos through the rental shops, streaming, cinema theatres, and video on demand in the United States. Blockbuster was internationally well known from the 1990s. It had employed at least 84,300 people throughout the world which included 58,500 from the United States and 25,800 people from other nations (Dana Jr, 2017).
The competition which rose from Netflix led to its eventual demise since it offered better services from the mail-order services, the automated rental kiosks, and the video on demand services. Netflix had started a niche market and begun to slowly take the entire market that Blockbuster had dominated. Blockbuster became hesitant to make bold moves and imitate the business model that was used by Netflix, claiming it was a confused one (Fleder & Hosanagar, 2009). In the efforts to maintain their business model, the customers were all lost to Netflix for they had better and convenient services as compared to those that were offered by Blockbuster. Blockbuster, having had a huge dominance at that time, did not bother to adapt to the changes that were implemented by Netflix to ensure its longevity in the market (Adkins, Conlon, Huffman & Hahn, n.d.). Blockbuster hence started to lose its revenue as a result and prompted it to file a bankruptcy protection. The remaining Blockbuster’s stores were then bought by the satellite television provider, Dish Network.
The company Netflix was firstly launched in the 1990s and played a major role in the distribution of DVDs which mainly filmed by use of mail. The competency of their services interrupted the major film renting services such as Blockbuster (Burroughs, 2018). The emergence of Netflix provided different services such as DVD by mail, streaming media, and video-on-demand. Having been founded in the year 1997, it expanded to be a television and film production and also an online distributor. The initial business model of Netflix involved the sales of DVD’s and rental business. Since most of the channels got revenue from the subscribers together with the advertisers, the programs became successful even if they did not reach the mass audience. In the year 2000s, the advancement in the compression technology ensured most of the homes gained access to the high-speed internet services and allowed the large video files to get easily streamed over the internet space (Greenberg, 2010).
In the year 2007, Netflix Media Company then expanded its business by introducing streaming of the media and retaining the DVD and Blu-ray rental services (Christensen, Raynor & McDonald, 2015). The company then expanded its business internationally, by introducing the streaming services to Canada and other areas in the world. Recently, Netflix services have been made available in over 190 countries which have been made available in the world except for some parts of Mainland China, North Korea and Syria (Kerr, 2013).
Netflix rise had exposed weaknesses in the existing movie rental services in the 1990s. First was the customer satisfaction and convenience. Blockbuster having had a large number of stores across the country, Netflix had to come with a strategy that was to beat that of Blockbuster. Netflix improved on the customer convenience by leveraging usage of the mailbox to get videos which ensured that the customers did not leave their homes in order to rent the movies or return them after watching. Netflix also started off with an effective management team with good leadership skills as compared with that of Blockbuster (Fleder & Hosanagar, 2009). The executives of Netflix had predicted a fast development in the emerging technology which changed the means of delivery of the movie rentals. The strategy of the company involved good customer services, internet streaming, and in addition to this was a virtual organization in the delivery of the online streaming effectively.
Netflix also had started out with a convenient pricing model which then was followed by the industry. The users who purchased the movies were not charged for the late fees for the movie rentals. Netflix’s pricing model was gained popularity among the people leading to more customers (Elaluf-Calderwood, 2014). Netflix continued to become stronger that most of the Americans moved to streaming of the videos and the movies instead of renting of the DVDs. Additionally, Netflix had been working on the TV box for downloading of the movies which took up to 16 hours in order to download them (Burroughs, 2018). On the other hand, Blockbuster was not ready to take up the new concept of streamlining the movies but instead opted to open other outlets for books and toys. With the technological developments, broadband became a faster way and the emergence of YouTube made it much easier for the Netflix Company to continue expanding its business.
In another way to make the people give away the DVD movie rentals, Netflix then came with another strategy in the film industry by giving out streaming movies which made it easier for the people to access them. The second part the strategy made by Netflix was avoiding retail, and the physical outlets making them focus only on the online streaming of movies. In this way, the company turned out to be a virtual organization having no sales personnel and retail stores. There were only a few warehouses and offices and warehouses where the employees decided whether to work on the flexible timings they had.
While the Netflix Company was beginning its service of DVD-by-mail which later d to be streaming services, Blockbuster was still making money in their revenue by the use of their model (Fleder & Hosanagar, 2009). In addition, the market margins for the new offerings from Netflix Company did not appear to be attractive as a model which is established the model. Blockbuster was also challenged for their technology of renting of movies was not convenient and faster as compared to that of Netflix with the streaming technologies and the services pertaining video-on-demand. For this reason, it hence struggled to compete against both especially when the Netflix Company had established itself and dominated the whole of America due to its conveniences in the offering of its services (McDonald, 2013).
Another factor which facilitated the eventual demise of the Blockbuster Company was the implications of their business model. Pursue the new business models either streaming services or the DVD-by-mail services requires the use of the current operating model to change the market view (McDonald, 2013). Blockbuster needed to change their approach in the retail stores owned by most of the people. Blockbuster, however, did not consider this option and instead continued carrying out their services and continued to earn their profits regardless of the strategies that had emerged from the onset of the Netflix media company (Herrington, 2015). Failure to come up with the strategies which were to outdo the other company, Blockbuster responded to the threats that were facing their business model when it was too late and most of the people had shifted to Netflix which were offering best services (Dana Jr, 2017). Blockbuster then tried eventually the DVD-by-mail service, the rental kiosks, and came up with a website which they used for the online streaming of movies after acquiring the player.
Technology has greatly helped in the development of businesses for a long period of time. Netflix in this scenario and similar category of players and the recent developments in the mobile technology and speed of the internet has played a critical role in its development. The fast internet speed has made it easy for people to stream at faster rates and at the same time come up with much better smartphones and this has changed how the products such as movies are delivered online to the customer (Murphy, 2011).
The internet has been full of many things and every day and more new things keep on emerging daily. The first mover, however, always do not guarantee success. In this case, Blockbuster was the first mover but Netflix emerged with a larger content and a much better technology in the same field (Voigt, Buliga & Michl, 2017).
Products are not sustainable without innovations. In this case, Blockbuster video needed to improve its ways of carrying out its business to avoid downtime, for Netflix had come with better ways marketing their products. The new way of delivery of products done online ensured it reduced the time that was taken when ordering and delivery of the products. Netflix also out beat Blockbuster in their pricing. The rentals of DVD which were charged at a fee of $5 also had made customers unhappy (Halal, n.d.). Netflix then took this to be a competitive strategy and then introduced some subscriptions done monthly which had a small limitless rental and also no additional fee was given.
With the strategies Netflix has put into place, the company has since remained the king of top streaming video providers with its service reaching more than 80 million users all over the continent. Netflix has recently remained dominant in the hit shows have driven millions of the users to watch movies no matter the number of days they give their users (Kerr, 2013). The growth of the company and its ability to break into the industries which are well established such as Blockbuster Company is one of the major accomplishments. The move from video rental to television and film will ensure the company remains dominant for most years in the industry.
Netflix can remain the dominant power for some period of time since the internet distribution has allowed Netflix to perform their businesses to different audiences across the world. Most of the subscribers of Netflix, however, have not realized the number of programs in which Netflix offers, the subscribers have not been exposed to the programs which they are interested in. The subscriber of Netflix has thought of their brand as an expansive library of different films. Most of the subscribers have got the best of the movies which have been offered by Netflix and thus making it more famous in the media industry (Kerr, 2013).
Some individuals in the United States have doubted if Netflix will maintain the dominance it has made in the market like the previous years. There have been seemingly the lack of innovations that Netflix have undertaken in the recent years that have been made in an attempt to improve the quality of film services offered by Netflix (Oat, 2013). One of the reasons as to why Netflix has remained reluctant in coming up with innovative techniques is due to the fact that, it has a massive amount of people who have subscribed. For instance, in America, Netflix has recorded a huge number of subscribers that are about 49 million who are available in over 43 percent of the United States households (Walker et al., 2017).
Netflix has also been known to be one of the biggest international film network. However, Netflix has not been offering the same amount of services everywhere across the globe as in the United States. Recently, their library has varied considerably since there have been varied norms of the global television trade. It is required that they provide distributor’s licenses before carrying out their services in some countries or regions. Netflix has also looked for the international rights for the streaming movie services they come with and has continually been making the future additions to its available library and the subscribers across the globe.
The great rental movie company, Netflix, had graduated rapidly to the streaming of the movies and suddenly disintegrated its service of DVD-by-mail and created “Qwikster”. This was as a result of the continuous hiking of prices for the purchases subscriptions made of the movies (Oster, Chen & Rosenthal, n.d.). Netflix had to make a plan to switch from the services of DVD-by-mail. Netflix had seen its customers base shifting and preferred DVD-by-mail. When the announcement of Qwikster was made some of the analysts argued that the only reasonable explanations for the move were that they were to change and sell its services of DVD-by-mail and keep their focus on online streaming (Tryon, 2015). The fast demise of Qwikster was led to the objections which were made due to the access to accounts, twofold billings and also having dealt with different unrelated identities of the name which had overawed the management.
Netflix affirms that, the online streaming of movies remains the future and that the services of DVD-by-mail suffer as a result of the costs which are high (Burroughs, 2018). This means that they are hoping to remain relevant to the coming generations by removing the services which are Obsolete and coming up with the ways to ensure they offer a competitive advantage to the movie industry. Netflix having started shopping Qwikster, they realized quickly that nobody was interested in the services and instead remained to the previous services offering (McDonald, 2013).
The original content has been the priority for the streaming fanatics. This is the respondents who pay more for the streaming services offered online. Amid these groups, the original content shows a growing number and the drive for them to keep subscribing. Netflix streaming video service and the offer of original content has seen its growth to be dramatic and Netflix has remained to be dominant in the movie market (Dixon, 2013). The Netflix’s market has vastly fragmented with its competitors by offering the offering original content, and exclusively giving access of the content from particular studios of movies to attract their customer’s certain movie studios to attract customers. The competitors have also fragmented the Netflix’s business model through removing the original content from their service.
The pending price of Netflix has increased their limits through the pricing power made in the competition. Competition increase has led to the limiting of the price power, an essentiality for the Netflix viability. Without the power of pricing, Netflix is not able to afford to continue to do the things which have helped in the management hype of their stock, for instance in investing and growing of their original content, attracting some new individuals and also maintaining their large library content (Tryon, 2013). The recent revelations of Netflix that the competitors have been willing to take some content from the company and begin their services have indicated that the business model of Netflix is shifting to the traditional television network.
Netflix being one of the biggest distributors of the movie shows the United States, it has expanded its business to the non-United States markets of which the subscribers across the world making them have their access (Kerr, 2013). This has led to the expansion of its global dominance in America and the world. As the subscriber’s numbers are increasingly growing, the Netflix library original content has also increased. Since there has been no been able to reach a truly international audience like Netflix, it thus has remained to be dominant in the media industry (Culp, Friedman, Lincoln, Reeve & Zepernick, n.d.). Netflix’s services are therefore projected to be dominant in the market for some period of time before the emergence of a new major television network due to the convenience of its services. While Netflix is trying to expand its market through opening of new markets. This would boost the subscriber base of Netflix. Netflix have faced numerous culture challenges in some countries which have disregarded their services of online streaming.
Conclusion
Netflix dominance in the market will thus depend on the efforts made by the company as there have been advancements in technology. Any other emerging company with better technological advancements and effective user experience may get a better chance in the movie and film industry if the same methods of distributing the movies are used for a long period of time. To succeed with the market dominance, the subscriber-funded services ought to give out enough programming that would ensure that the viewers find the services worthy of their fees of subscriptions (Dixon, 2013). The services provided by the company need to provide enough value for the subscribers to make them continue to pay. Most of the portals have provided this value through offering specific types of programming.
References
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