Netflix is one of the largest online providers of movie rentals today with a wide array of selections and almost 6.5 million subscribers. The company is well known for its unique services such as their user-friendly interface and quick delivery service among others. Although Netflix has had its fair share of criticisms, the company has successfully thrived in the movie rental industry over the years. Their early intervention with emerging technologies played a strong role in supporting Netflix making it the movie rental giant that it is today. One of the newest emerging technologies that are growing in heavy demand is the Video On Demand (VOD) market.
We feel that Netflix should enter the VOD market and start offering streaming videos of movies similar to the collection that they already have as soon as possible. By doing this Netflix will be able to differentiate itself even more than its current position and trim down the possible chances of price competition. There are a few challenges that Netflix has to face to get into this new market because the technology is fairly new, content is relatively expensive and licenses are required to broadcast the content legally. These issues will be addressed later in this report. We also feel that entering the VOD market is a good strategy because the current DVD technology will eventually disappear and downloading and streaming of movies will become the new movie rental market.
Current strategy and challenge
The company’s initial model DVD by mail service was a genius but it still needed a little tweaking to work out the minor problems. The company’s current strategy is to provide a huge variety of movie rentals at a monthly price, charge no late fees and deliver within one business day of the order. This worked extremely well until the new market of VOD emerged. The new task is to get into this new market and overcome all the challenges put forth by it.
As mentioned earlier in this...