popularity of streaming content over the internet grows and consumers get more

Popularity of streaming content over the internet

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popularity of streaming content over the internet grows, and consumers get more accustomed to viewing content with the touch of a button, waiting days for movie rentals to arrive in the mail may quickly become an outdated business strategy and one that will eventually lead to failure for Netflix.Founder, Reed Hastings, is considering the idea that he offer video on demand (VOD) content to subscribers over the internet, delivering the content they want in 17
BUSI 690-D06: Group Case Study 1: Netflixseconds. This idea has been quickly gaining popularity and other entertainment channels have already begun offering some of these services. Hastings wants to make sure that he makes choices that will keep Netflix a major entertainment provider and sets Netflix up for future success. He needs to consider changing Netflix’s business strategy to offer streaming content rather than physical DVD’s through the mail. This is a difficult decision, as it will take Netflix in a new and uncertain direction, however it is necessary for Netflix’s survival. As VOD gains popularity, DVD’s will become obsolete, and subscribers won’t want to wait for days to receive their entertainment. Netflix will lose a lot of money that they had invested in a DVD library, and physical distribution centers, but it is necessary to set Netflix up for success. It is the recommendation of this group that Netflix should move forward with its plan to switch to offering a video on demand, internet streaming service, rather than stick to its original business strategy, which was to offer DVD rentals through the mail. By doing so, Netflix will be able to cut several large expenditures from their budgets. Firstly,Netflix will no longer need to spend money buying physical DVD’s, and in the short term, Netflix can work on selling their current DVD inventory, as it will no longer be needed, generating temporary cash flows. Also, Netflix will no longer need its physical distribution centers, thus cutting costs on facilities. Also with this new business strategy, Netflix no longer incurs costs associated with distributing its products, as the live streaming of content is done through internet providers such as AT&T and Comcast, both of which are paid for by the consumer, not Netflix. This new business model leaves Netflix with less expenditure outside of acquiring new content to make available through VOD, and attracting new subscribers. Netflix will deploy this new strategy in phases. The18
BUSI 690-D06: Group Case Study 1: Netflixfirst year will be the introduction of the new VOD feature in addition to the current offersof DVD by mail. The second year will begin to see the reduction of available DVD’s by mail, with an increased emphasis on subscribers using the new VOD platform. The final year will be a further reduction in DVD usage with the eventually end to the DVD by mail option all together. With this new business strategy, Netflix’s new financial

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