Netflix in 2011 Case Solution

Strengths

Weaknesses

Netflix

Blockbuster

Netflix

Blockbuster

• Netflix’s business model relied on 3 DVDs at once model then moved to unlimited.

• Collaboration with USPS.

• No late fee policy.

• Focus on less-popular titles.

• Used algorithms to offer movie suggestions to users.

• Physical stores available within a 10-minute drive.

• Late fees made up 10% of revenues.

• In case of sudden plans, people could get the movies within 10 minutes.

• One-day delivery minimum.

• In some areas delivery took more than a week.

• Less collection of unpopular titles.

• Per movie rental instead of a subscription model.

• The store personnel offered recommendations not an algorithm.

• Lack of a national inventory.

Opportunities

Threats

Netflix

Blockbuster

Netflix

Blockbuster

• Leveraged the dot com boom.

• Offered an instantly watch service collaborating with Starz entertainment which was the start of the streaming service.

• Offering Netflix-produced content to differentiate.

• Queuing movies to offer convenience to customers.

• Offered quick video rentals and sold movies after being rented out 9-10 times.

• From VHD tapes, shifted to cover the demand arising from DVD-players.

• Running both the streaming service and DVD-by-post business was getting confusing.

• Threatened by Netflix’s strategy of mailing DVDs, offering a subscription model, and no late fee.