The age of digitalisation has brought about considerable changes in the manner in which the different operations of the business are carried out and also in the way in which the viewers have started viewing the general television shows and other movies at large (Lobato 2017). The Netflix can be stated to be one of the most successful online websites which showcase shows and movies. The report has analysed how the different technological advancements which have taken place along with the different pricing strategies have been successful in making Netflix very popular around the globe. The report also examines the pricing strategies having been adopted by Netflix to engage in a competition with Blockbuster. The innovative approaches which have been taken by Netflix will be discussed along with an analysis of its Competitor. Innovation can be considered to be an essential aspect of the business plan of Netflix whereby it has been able to become one of the most popular online websites which streams the videos.
The report follows a structured format whereby the concepts of Strategic Position, Strategic Choice and action will be discussed along with a discussion on the Strategic action. Additionally, the report will also examine the manner in which the first movers, followers as well as the innovation has had a significant role to play in the overall success of Netflix. The report begins with a brief introduction to the company which will then be followed by the discussion of the firm`s competitor, Netflix as well (Netflix.com. 2018). The manner in which Netflix has been able to combat against competition concerning Blockbuster will also be discussed in special light to the innovations used, the method of operations and other related aspects. The latter half of the report focuses on the analysis of whether Netflix will remain a market leader in the long term or not.
The Blockbuster LLC can be stated to be the Blockbuster video firm which is based in America and can be reported to be a supplier of various streaming, video rental and other related services. The firm became internationally famous in the year 1990s and was popular until the year 2004 which made it most successful (Jenner 2016). The firm had approximately 84000 employees worldwide and opened its first store in the year 1985 in Texas. The firm is hugely popular as it often engages in the customisation of the inventory concerning the local demographics of the audience at large. The company became a multi-billion organisation with its merger with Viacom in the year 1993.
Netflix is an entertainment firm which is based in America and was found in the year 1997, by Reed Hastings and Marc Randolph. The company was located in California and provides original as well as specialised data content along with facilities like video on demand. The international expansion of the firm began to take place in the year 2010 whereby they began to stream videos online (Hill, Jones and Schilling 2014). The company split its DVD mails, and the streaming service which caused dissatisfaction among the different consumers and the price of the shares dwindled as well. The share prices began to stable when the firm applied the original program formula. It can also be stated that Netflix has been dominating the online streaming market whereby its significant competitors are Redbox, Amazon prime and hot star.
As technology has been changing considerably, Netflix has taken a mix of a large number of strategies which will go a long way in assisting the firm to ensure that they can sell its services. It is the changing technological advancement as possessed by Netflix which has helped the firm in providing that it is able to leave its competitors behind successfully and has been successful in providing that it has been able to become one of the most successful content providers (Davis 2016). This reflects that Netflix believes in using digitalisation to ensure success. From a DVD provider to an original content provider, Netflix has come a long way.
The reason why Netflix has gained considerable success in the content market is that it adopted a creative business model and planning to attain the demand of the customers. It was the year 2006 when the company began to introduce the online video streaming service, and this resulted in the shrinking of the DVD market, but Netflix continued to prosper. According to Aversa and Haefliger (2017), only the evolution of the different operations cannot be considered to enough, and concerning this, it becomes critical that the various businesses are successfully able to respond to the disruption in the digital era and use it as an advantage for themselves (Cox and Kaimann 2015). The social media can be used as a useful tool as it is deeply connected with the media sector and be used to enable an essential opportunity to make small as well as medium enterprises prosper. The usage of the internet along with the portals like WEB 2.0 which have the changed the way in which the different networks are being used on how the Television media is being affected drastically. The company, Netflix has contributed considerably in making the online library a success which has also helped in ensuring that it can provide an excellent service to the different subscribers. According to Aversa, Furnari and Haefliger (2015), the year 2010 was very crucial for Netflix as they signed a five-year agreement with the Starz entertainments and also with the Paramount pictures. The business model of Netflix has been very trendy as it has been able to provide rental services to the subscribers along with a differentiated aspect.
The innovative strategies as used by Netflix have been successful in ensuring that Netflix has been able to create a new market for itself along with creating a good number of subscribers. This has been successful in disrupting the entire market, and the market leaders have been affected considerably as well (Aversa, Haefliger and Reza 2017). Earlier, Netflix just made use of the typical advertisement and other techniques, but later on, through its sources, it was able to mail the subscribers of Blockbuster which enabled the firm to make a more extensive selection of content and also helped them to ensure that its most significant competitor Blockbuster, was in many ruins.
As the digitalisation has become considerably popular, the use of online streaming and other related video themes has improved significantly. The Netflix undertook all plans to ensure that it can provide original content to the firm along with ensuring that it is successfully able to outwit its competitor, Blockbuster. When Netflix was able to supply an online DVD rental service system, there was no need for them to set up a physical retail store. As the various online e-commerce business approach the different customers online and do not require any stores, Blockbuster began to lose out on its brand identity and on the other hand, Netflix started to become considerably popular as it had been taking strategic decisions which were not possible for Blockbuster to copy (Cox 2014). Blockbuster failed to understand the needs of the market, and this is what led to their considerable downfall.
From the given analysis, it can be understood that the monthly subscription service as adopted by Netflix went a long way in ensuring that it can engage in monthly subscriptions system which would provide that it can gain access to a good income and moreover, there exists no concept of a late fees which would then attract the different consumers. The monthly pricing strategy of Netflix has been very reasonable whereby it has been around $44 for 8 DVDs and about $8 for one DVD at large. Another aspect which differentiates Netflix is that it has begun to provide unlimited online streaming of movies and TV show.
As stated earlier, the company has been successful in utilising a large number of innovative strategies which has gone a long way in helping the firm to perform better and also be able to gain a sustainable advantage over its rival firm, Blockbuster (Matrix 2014). The company assists the different users in simply navigating the website and also be able to fulfil the request of streaming of the online video. The company knew the nature of evolvement and made considerable efforts to ensure that it was able to adopt the different styles as the present and make their use in the future so that they will be able to gain a competitive advantage. This was facilitated by the improvisation of the use of internet and hence, served as a boost.
In addition to this, the company has been making use of considerably effective pricing strategies such that there are no late fees for the customers and allowed a device sharing of around six members (Doz 2017). The company was successful in being able to differentiate its activities from that of its target market is that it was able to let go of the traditional methods and ensure that it can take over the arena where Blockbuster was a failure (McDonald and Smith-Rowsey 2016). In addition to this, Blockbuster also engages in hardware which Netflix does not do and hence, helps them to differentiate from the firm. It instead focuses on providing uninterrupted and specialised services to the different members on the audience and applies innovative as well as unique strategies which would help them in gaining considerable success in the entertainment industry.
The year 2011, can be considered to be very crucial for Netflix whereby it announced a hike in the prices of its DVD along with a hike in its online streaming service. As mentioned earlier, the subscription which was charged earlier was $9.99 monthly, but then when they hiked the price, they changed it to around $16 (Ethiraj, Gambardella and Helfat 2018). The reason why Netflix did this was that it wanted to engage in various innovative strategies and ensure that the platform of the firm improves but this should not have had an impact on the consumer group. In the same manner, the different customers were not willing to pay the cost of the strategies (McKenzie and Smirnov 2017). The Qwikster was the DVD by mail service which would comprise of different video games. Moreover, Qwikster along with Netflix made use of a different website and credit charges. The only reason why these two services had to be integrated was that Reed Hastings is the chief executive of Netflix. The reason why Qwikster could not function well could be contributed to a large number of factors, and some of them have been listed as follows:
The change in the name from Netflix to Qwikster was something that the different customers could not take into consideration and in addition to this, the split of the two websites also lead to specific changes in the credit card system which further bought about particular changes in the approach of the consumers towards the general audience at large (O’brien, Knight and Harris 2017). Additionally, the customers were not willing to pay the hiked prices of the mail orders, and this could have been another reason which would have led to the ultimate downfall of Qwikster as a brand.
The different subscribers can be deemed as very selective and concerning this when the Qwikster was forcing the different Netflix users with a combination of the video streaming as well as the subscriptions so that they would create separate accounts for the two which was not called for. Although they were considered to be one, the bills for both the websites were distinct and different ratings had to be provided for them. According to Pittman and Sheehan (2015), the design of Qwikster can be stated to be good, but the results did not turn out to be as effective as it should have been. It was in the hands of Reed Hastings to see to it that the strategies of Qwikster could be implemented which would have helped the firm in creating the designs more effectively and if this was done and they were used as a combined facility then it would have helped in gaining the customer approach as well as support. The name itself was unable to attract the target audience as they were bound to misspell the names (Rigby et al. 2016). Moreover, it contributed to the overall confusion whereby the users did not want to handle the two systems and preferred to make use of the Netflix rather than making use of Qwikster. Additionally, Qwikster did not allow the subscribers to make use of the DVDs along with game titles for connecting to Wifi Network which can be stated to be another problem for them. The Qwikster cannot be taken to be an easy solution for the different subscribers who were much more accustomed to Netflix and instead of keeping them as two different networks, it was required to be combined. Hence, due to the above-stated reasons, Qwikster could not find success in the long run.
Due to the mishap of Qwikster, the Chief Executive Officer, Reed Hastings was highly criticised and led to a backlash from various analysts. Hence, after this downfall of the company, the organisation was required to build its strategy and gain its competitive positioning in the market once again in a mannerism which would go a long way in ensuring that it can gain the designated target audience and thereby understand the preferences of the customers (Robson 2015). The company could have used various methods to provide that they were back in a proper market positioning. Netflix could have made use of a similar website in a manner such that the understanding of the consumers was not confused and that the popularity of the streaming site remained. The combination of Qwikster, as well as Netflix, should have been made use of to see to it that the different consumers could have been provided with the advantage of ensuring that they were successfully able to gain success (Gomez-Uribe and Hunt 2016). Moreover, the manner in which the company increased its pricing was also incorrect that too for the two separate contents which was not well received by the customers. However, according to Rogers (2015), the one side which went a long way in assisting the company to build itself was the idea related to the original content series. The different series which Netflix is the sole provider of are serials like Stranger Things, Black mirror, 13 Reasons Why, Modern Family and This is us which has helped the firm to finally understand the kind of strategy which the firm needed to apply to ensure success. Similarly, it is recommended that Netflix keeps applying these strategies to ensure that it is successfully able to gain a larger audience and perform competitively (Wheelen et al. 2017).
Hence, instead of this, it can be stated that Netflix learnt from its mistakes and ensured that to attract the target audience it needs to come up with something original and straightforward instead of making the different things more complicated for the target audience.
At present, Netflix is enjoying an essential position in the target market and seeks to it that they take advantage of the current boost as present in the industry at large. To ensure success in the future, the pricing strategies of the firm need to be revised so that the consumers are attracted. As it has taken domination in the original content market, it is recommended in the future Netflix comes up with certain ideologies in the same line which will help it to compete effectively. It is the original content aspect that helped the firm to get over Qwikster and also helped them to regain their positioning and hence, it must continue to do so in various countries for customised content which will increase their viewers (Sawhney 2017). The diversity model will assist them to gain sustainability in the market. The business model of Netflix needs to be such that it can act as a threat to the different competitors and moreover, lastly, Netflix is required to understand the manner in which the different customers prefer to like their content to be and how to satisfy their demands.
Conclusion
Hence, it can be stated that the above analysis as done on Netflix went a long way in ensuring that the rise and fall of Netflix were discussed along with comparing this performance to that of its competitor named Blockbuster. The different strategies as adopted by Netflix were presented along with the adaptation to the change in technology. The changing technology advancements helped Netflix to take advantage of the online era which Blockbuster could not do, and this could be considered to be the reason why Netflix could win over the Blockbuster and take over the firm`s fame.
In addition to this, it can be understood that the innovative nature of Netflix could be described as disruptive and it maintained the right balance of retail mail as well as online streaming. The firm realised that the retail store strategy has not been working and then enabled online streaming only and approached the consumers in the right manner. As understood from the case, Netflix learnt from its mistakes which it committed during Qwikster and then adopted an original content strategy which assisted it in becoming the leading content provider and online video streaming firm as the present. Netflix used it as a rebuilt strategy and revised the pricing which helped it to gain a good position. Hence, it is recommended that Netflix makes use of customised content for different companies and ensures tight security measures so that other subscribers can not copy its original content. In this manner, Netflix would be able to sustain its position in the business environment.
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