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Lecture 3

RSM251H1 Lecture 3: Netflix SWOT

by OneClass1312095 , Spring 2018
1 Page
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Department
Rotman Commerce
Course Code
RSM251H1
Professor
Claire I.Tsai
Lecture
3

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Netflix Case Analysis
History:!
-founded in 1997!
-oered DVD home delivery using snail mail!
-little to no competition for DVD rentals, closest competitor: VHS!
-‘no late fees policy’ launched due to high fees/slow delivery !
-unlimited rentals!
-keep 4 DVDs at a time!
-2001: announced intention to create a VOD business !
-2007: $1b business, $64M in cashflow !
-Video on Demand (VOD), pay per view and streaming gaining popularity !
-substantial investments: $10M (2006), $40M (2007)!
-limitation: computer to TV connectivity, access to online content —> evolving quickly tho!
SWOT Analysis!
-Strengths!
-Existing Subscription Model!
-unique recommendation system !
-large DVD selection for online rental !
-fast delivery !
-Weaknesses!
-diculties meeting demand for new hardcopy releases !
-subscription plan only attractive to frequent renters (does not appeal to less frequent
users)!
-DVDs damaged/lost in transit!
-only operating in the DVD segment with so much potential in VOD!
-Opportunities!
-international expansion !
-VOD expansion !
-original Netflix content !
-new product lines: video games, educational material, etc.!
-alternative subscription models to appeal to less frequent movie renters!
-Threats!
-Blockbuster!
-other VOD competitors !
-Vongo!
-CinemaNow!
-MovieBeam!
-MovieLink!
-Traditional Cable/Satellite Providers!
-VOD content prices/availability !
-limited VOD content: studios concerned about pirating and cannibalizing DVD sales
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Description
Netix Case Analysis History: founded in 1997 oered DVD home delivery using snail mail little to no competition for DVD rentals, closest competitor: VHS no late fees policy launched due to high feesslow delivery unlimited rentals keep 4 DVDs at a time 2001: announced intention to create a VOD business 2007: 1b business, 64M in cashow Video on Demand (VOD), pay per view and streaming gaining popularity substantial investments: 10M (2006), 40M (2007) limitation: computer to TV connectivity, access to online content > evolving quickly tho SWOT Analysis Strengths Existing Subscription Model unique recommendation system large DVD selection for online rental fast delivery Weaknesses diculties meeting demand for new hardcopy releases subscription plan only attractive to frequent renters (does not appeal to less frequent users) DVDs damagedlost in transit only operating in the DVD segment with so much potential in VOD Opportunities international expansion VOD expansion original Netix content new product lines: video games, educational material, etc. alternative subscription models to appeal to less frequent movie renters Threats Blockbuster other VOD competitors Vongo CinemaNow MovieBeam MovieLink Traditional CableSatellite Providers VOD content pricesavailability limited VOD content: studios concerned about pirating and cannibalizing DVD sales
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