Movie Rental Industry Netflix and Blockbuster Case Analysis Lydia Floyd Strategic Management MGT422 February 28, 2013 Introduction Netflix competitive strategy In order for Netflix to understand were the business lies as it relates to the competition it is important to seek the correct strategy in order to be and stay competitive. The five competitive strategies are * Low- Cost * Broad Differentiation * Best-Cost * Focused niche based on low cost * Focused niche based on differentiation Since each strategy requires totally a different approached my recommendations will be based on focused niche based on differentiation.
Netflix originally offered DVD’s on a fee per DVD basis and eventually branched off into the monthly subscription service business. The company at one point was forecasted to have over 11. 3 million subscribers by 2009 and 8 million VOD (Video on Demand) customers by 2013. (See Exhibit 1) This exhibit basically shows how the number of video streaming choices has increased over the past several years. So the company is moving in the right direction as far as broaden their differentiation strategy.
The next exhibit shows how Netflix compares to the its main competition and how the company’s net profit margin exceeds a competitor like Blockbuster. The attached SWOT analysis for Netflix mentions some very important points that are associated with a focused differentiation strategy. The company is staying committed to how to service the niche better than the competition and speaks to the areas that appeal to specific customers such as offering services that allow subscribers to go back to pilot episodes of a television series.
Reference Page Thompson , A. University of Alabama 2008 Case 5 Competition in the Movie Rental Industry in 2008: Neflix and Blockbuster battle for market leadership http://beta. fool. com/danielsparks/2012/10/31/netflix-swot-analysis/15522/ http://www. slideshare. net/only1kiku/techindnetflix Gamble, John E. , Strickland, A. J. , & Thompson, Arthur A. , 2010 Crafting and Executing Strategy McGraw Hill/ Irwin New York New York http://finance. yahoo. com/q? s=NFLX&ql=1