Strategy and Case Analysis

Question: Discuss about theStrategy and Case Analysis. Answer: Introduction Netflix Company was established in the year 1997 by Reed Hastings and Marc Randolph. The company has gradually, become powerful since last nineteen years and have altered the thinking of consumers of watching movies and videos. The company was established with mere thirty personnel. There were nine hundred and twenty five offerings available for fifty cents per rental initially. As on date the company offers thousands of movies and has branched out in original content. The company continues to provide DVD rentals with huge offerings. The report below is the analysis of the rise of the company, since its inception and its future in the highly competitive market (Blake, 2016). Changing Technology In the year 1997 the company was founded, and within one year of its establishment the company launched 925 rentals offering with a staff of 30 people at a rental cost of 50 cents. In the year 1999 the company introduced monthly subscriptions. Then moving ahead in the year 2000, the company dropped rentals and turned to subscriptions. In the year 2005, 35000 movies were offered. The company mailed out million DVDs each day. From 2006-2012 the sale of DVDs came down and the company paid heed to its online offerings (Walker, 2016). The company had a mark in the streaming market, as it was most favored. In the year 2012 the company released original content. It started with documentaries and stand up shows. By 2013 Netflix had 27.1 million US streamers and its usage in 40 countries. Pricing Strategy The company incorporates a very smart pricing strategy. At the time of their first offering the company did not charge any extra cost. If the customer had one DVD subscription, they got a free streaming video. The customers even shifted from a two or three DVD subscription to an economical one DVD subscription as the streaming option too provided various options. The movies can be watched on I-pads, television and computers (Murphy, 2011). Then the company instituted a large increase in the prices and had a clear message that the company is clearly segmenting its customer base. Some customers gladly gave up the DVD option while others paid more. Some of them entirely left. Netflix has built this pricing strategy into their model and they have a price based response for this action. After some period of time when the customer base will be totally and successfully shifted the company will offer a mid way option of maybe providing a frequent DVD mail offering, which will pacify the obje ctions of the customers. The message of the company is loud and clear that it wants to increase its average selling price and thereby plans to provide more to its subscribers in return of their price (Pelts, 2016). Innovation The company sets a great example of disruptive innovation. Disruptive innovation is an innovation which creates a new market and then gradually disrupts the already performing market, thereby dislocating the existing market leaders. Consumers may or may not notice the big change, but these innovations simply become part of their everyday life. Disruptive innovation was part of the company strategy (Ostrower, 2016). For Netflix, the DVD by mail model, pushed its competitors into bankruptcy. The company offered the services which were more affordable, accessible and available to the underserved customers (Capital, 2016). Netflix Current Performance Netflix consumers are being added day after day. Netflix had an addition of 17 million hits last year. Their consumer base increased to 13 billion in 2015 from the previous year and the situation was same for 2016. More consumers are choosing Netflix to watch cable TV, play video-games and watch movie rather than going in theaters. It is commendable job for Netflix to make so many consumers dependent on them. Netflix is growing drastically and they are making smart strategies. In year 2016 they have entered international markets for growth, for an example, in China, the Company is planning to invest huge in international markets for expansion and growth. In fact, they will also invest in licensing content. This will prove to be an effective strategy as they will shine their name in international grounds as well. Currently, they have already proved that how much dependent their customers are on them. Future As per Pacific Crest Securities, Netflix has become the leading brand for future TV of the country. They key to Netflixs success lie in the fact that it has entered 130 global countries and will reach up to 190 in the near future. The Netflix future strategy lies in the fact that they want to be global and move forward in taking international licensing to as many numbers as possible. Netflix provides original authentic data and has the authority to provide to the whole world which makes it very different from others. Netflix is planning to invest huge in this strategy to become a world power. They are planning for huge data base of original movie shows and video games to distribute around the globe. With the strategy of being global, Netflix is planning to lower its costs due to economy of scales. Being global will automatically help them lower down cost per subscriber which will then increase more customer base including people from lower middle class (Mcalone, 2016). Netflix intern ational expansion and original data will give them huge rise in the future. Conclusion If we analyze this report it becomes clear that Netflix as a company has well adapted itself as per changing situations. In the 90s, people were more dependent on DVDs for watching movies, hence the company was primarily engaged in rental offering of DVDs. In the early 2000, the company moved from rentals to monthly subscriptions thereby shifting the dependency of consumers towards subscription. And at a time when a large section of people especially the youth became regular consumers of the Internet, which is when the company shifted its focus towards online offerings. The idea clicked and the company saw immense growth as it was well accepted by the target audience. This is how Netflix changed the concept of watching movies and video. Another reason for the companys growth is its innovative idea of releasing original content in 2012 in the form of documentaries and stand up shows. The combination of the companys international expansion as well as distribution of original content is likely give a further boost to the companys growth. Hence, not succumbing to the change in business environment and low demand of DVDs, Netflix succeeded in writing its own success story. References Blake, K., 2016. The Rise of Netflix, Available at: https://www.engadget.com/2016/09/19/the-rise-of-netflix/ Capital, S., 2016. Disruptive Innovation: How Netflix revolutionised the video market, Available at: https://www.seiercapital.com/disruptive-innovation-how-netflix-revolutionised-the-video-market/ Mcalone, N., 2016. Netflix is the 'leading model for the future of television,' according to Wall Street analysts, Available at: https://www.businessinsider.in/Netflix-is-the-leading-model-for-the-future-of-television-according-to-Wall-Street-analysts/articleshow/51130093.cms Murphy, E., 2011. Netflix pricing strategy, Available at: https://blogs.harvard.edu/cqtwo/2011/07/14/netflix-pricing-strategy/ Ostrower, D., 2016. Netflix Instant Video Streaming: A Disruptive Innovation Thats Disrupting Netflix, Available at: https://www.altitudeinc.com/netflix-a-disruptive-innovation-thats-disrupting-netflix/ Pelts, S., 2016. What Is the Netflix Pricing Strategy?, Available at: https://marketrealist.com/2016/10/netflix-pricing-strategy/ Walker, N., 2016. The rise of Netflix, Available at: https://www.businessreviewusa.com/leadership/5478/The-rise-of-Netflix