Netflix Streaming Case

NETFLIX

Entering the Video on Demand Industry through Providing

Streaming Movies

Rico Chiu Sherwin Doroudi Travis Haussler Aditya Khosla

Sean Mattingly

March 7, 2007

1

Contents

1 Introduction 3

2 A Closer Look at Netflix's History 3

3 SWOT Analysis 4

3.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

3.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

3.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

3.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

4 Six Forces Analysis of the Video on Demand Industry 6

4.1 Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

4.2 Rivalry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

4.3 Supplier Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

4.4 Substitutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

4.5 Buyer Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

4.6 Complements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

5 Netflix's Entry into the VOD Industry via Streaming Movies 9

5.1 Business Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

5.2 Netflix's Choice of Streaming Video over Movie Downloads . . . . . . . . . . . . . . . . . . . 10

5.3 One Subscription: Tying-in DVD Rentals and Streaming Movies . . . . . . . . . . . . . . . . 10

5.4 Positioning for the Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

6 Conclusion 13

References 14

References

[1] Ellis, John. "Strategy". FastCompany.com. Issue 64. Pg 66. October 2002.

http://www.fastcompany.com/online/64/jellis.html

[2] "Netflix". Answers.com.

http://www.answers.com/topic/netflix-inc

[3] O'Brien, Jeffery M. "The Netflix Effect". Wired.com. Issue 10.12. December 2002.

http://www.wired.com/wired/archive/10.12/netflix.html

[4] McGregor, Jena. "High-tech Achiever: Netflix". FastCompany.com. Issue 99. Pg 48. October 2005.