Netflix 's Business Model and Strategy in Renting Movies and TV Case Study

Netflix s Business Model and Strategy in Renting Movies and TV Episodes - Case Study ExampleDespite having constant revenues and profits, the keep comp any(prenominal) hit a major turnaround in 2010 that resulted in a constant decline of the phoner. This paper will therefore analyse Netflix case by focusing on the riddles that resulted in the decline of Netflix calling. The essay will also analyse alternative solutions and their application Netflixs case. Problems That Led to the Companys Decline The main problem that caused the decline of Netflix resulted from mismanagement of the steady growth process that the political party was undergoing. By the last quarter of the 2010 trading period, Netflixs annual revenues had reached $156 million (Arthur, 2010). This made the companys shares to reach $170.83 that was the highest price in the companys history. Between 2001 and 2010, the company recorded high profits but did not demonstrate any solid investment. It is possible that the c ompany ploughed back its profits for short-term investment projects such as building its customer base. The company failed to make long investments that would ensure its sustainability. Lack of appropriate strategies also made the company to lack perception on future changes in technology that would greatly affect the industry. The company failed to adopt new technology particularly the use of technology and the internet. Traditional renting of DVDs was replaced by online purchase of movies and TV episodes. During the trading period of 2009, the company experienced a sharp decline in revenues from renting of blockbusters and DVDs. Netflix suffered heavy losses from its purchase of association right from Hollywood Entertainment Company. In 2005, the company authorise over $800 million to purchase Hollywood rights leading to its bankruptcy. Of the $800 million, Netflix recovered however $ 600 million, which did not even cover for its initial investments. The availability of alterna tives methods where people can recover movies or video game also affected Netflix annual revenues making the company to incur heavy losses. Analysis Lack of a supportive business environment is the main factor that led to the decline of Netflix. Movies and video games were the only products that the company offered. Using the 4Ps analysis, Netflixs main products were the movies and video games that were mainly targeted for the entertainment industry. The company was only involved with the marketing of the product with little or no modification on the original product. Netflix marketed its products in the form of DVDs. The company offered its products through term of a contract service whereby customers would rent a DVD for a period ranging from one month. The price of the product depended on the duration and the package required by the customer. Netflix send out most of movie DVDs to its customers on rental basis. Promotion is a significant aspect in marketing. However, the compan y seems to have failed in its advertisement strategies since it did not try the potentials of internet-based advertisements. The porters five forces are alternative marketing tools that can be used to analyse the companys problem (Bade, & Michael, 2001). Blockbuster, Red box, and Netflix were the only competitors in the industry. This indicates that the industry had a finite number of competitors and hence minimum threat of new entrants. The competitors dealt with similar products that had