Netflix Inc.: Streaming Away from DVDs
(6 pages of text)
2018; 2017; 2016; 2015; 2014
This case examines two of the leading video rental services in the United States, Blockbuster and Netflix, and how each adapted to changing technology and market forces. At the end of the case, Blockbuster has declared bankruptcy and Netflix has seen its first decline in subscribers since its founding in 1997. Netflix also faces a number of new threats, including illegal file sharing, rental kiosks, and new low-cost video-on-demand (VOD) services. Netflix responds to these threats by announcing that it will split the company in two — Netflix will focus exclusively on streaming content, while a new subsidiary called Qwikster will be restricted to providing DVDs by mail. Customers overwhelmingly react negatively to the announcement, and Netflix’s stock price plunges by more than 50 per cent.
The case can be used to conduct a SWOT analysis of Netflix. More advanced students may engage in independent research to conduct a detailed analysis of other factors. Furthermore, this case familiarizes students with the impact of disruptive technologies and the link between technology and the business model viability.
Arts, Entertainment, Sports and Recreation
United States, Medium, 2011
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