Netflix Inc.: The Second Act - Moving into Streaming
(9 pages of text)
Case (Pub Mat)
In late 2011, Netflix was migrating from its highly successful business model of delivering DVDs by mail to streaming movies and other media content directly to subscribers' televisions. To be profitable, Netflix decided to charge more for receiving DVDs by mail—a service that its existing customers had come to expect as a minor add-on to their original subscription arrangement. This charge led to a huge backlash: subscribers defected and Netflix's stock price dropped. Netflix faced the dilemma of remaining profitable in the video streaming business while paying much more for content and dealing with competition that had been absent in its DVD-by-mail business model. The company was at a crossroads; the path it chose would affect its future. Should it return to combining the two services or continue with two separate services and live with the consequences?
This case is a follow-up to Netflix, 9B09M093
, and precedes Netflix: Proving the Skeptics Wrong, 9B16M081
This case demonstrates that, although competitors may be able to copy one or more parts of a strategy, it is the holistic manner in which the different parts combine that creates the most difficulty for others attempting to copy the strategy in its entirety. Students are encouraged to learn how to sift through a variety of options.
This case is suitable toward the end of a strategy course or an advanced elective in competitive strategy or strategic management at the MBA or executive education level. Students will learn when and how to innovate a business model to deliver and capture more value from customers than the competition. Students will learn to appreciate why success in one business does not necessarily translate when a company tries to apply the same business model in its expansion decisions.
Information, Media & Telecommunications
United States, Medium, 2011
$5.30 CAD / $5.00 USD Printed Copy
$4.50 CAD / $4.25 USD Permissions
$4.50 CAD / $4.25 USD Digital Download