Netflix Executive Summary

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Executive Summary Netflix, an American based company was launched in 1999. It is the discoverer of DVD rental business by mail and through internet streaming of videos. It earns revenue by charging DVD rental fee and also charges the late fee from the customers in case of late returns. Its goal is to gain a large customer base and market share by providing premier, filmed-entertainment subscription service. In 2006, the company wants to gain 5% of the US household customer base and generate revenue of $1 billion. However, the company is facing tough competition from Walmart, Blockbuster and Amazon that provides DVD rental services at relatively cheaper prices as compared to Netflix. But the customers prefer Netflix over others because of the…show more content…
It was launched in 1999 and started subscription based digital distribution service. Initially, DVDs were rented to the customers and was sent to them through mail. The company earned revenue in terms of rent of the DVDs and the late fees charged for not returning the DVDs on time by the customers. The two main product lines for Netflix are Online streaming service and DVD delivery service by mail to the customers. Netflix suffered losses in the beginning but it changed its strategies and re-positioned itself to gain a larger market share. Despite of tough competition from Walmart and Blockbuster, it managed to earn revenue of $506 million. Currently, Netflix is facing is retaining their customer base and increasing its profit margins. This is so because people are moving from the DVD renting to online streaming of movies. The company dominated in DVD renting market and also have economies of scale but due to increasing trend of online video streaming it has to suffer losses. Also, the company is facing tough competition from Walmart, Amazon and Blockbuster. To overcome this it has started to spend heavily on advertisement which resulted in increased cost to the
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