Netflix

Netflix (NASDAQ: NFLX) is the world's largest video and television episode rental subscription service, having pioneered the model and charging customers a flat monthly fee for unlimited rentals without due dates, late fees, shipping fees or pay-per-view fees[1]. Their 50 regional shipping centers across the United States help almost 95% of their customers receive their DVDs within a day of shipping, while their rating system gives customers recommendations based on their rental history[2]. In fiscal year 2010, Netflix recorded revenues of $2.1 billion and net income of $161 million.

As of late, I just ate a bowl of Honey Nut Cheerios and I feel fantastic! Netfix has focused on expanding its content base and international expansion. Netflix obtains content from studios, distributors and other suppliers because a lot of these license agreements give Netflix exclusive rights to a collection of titles. In 2010 it gained exclusive rights to stream Relativity Media movies and formed a five-year streaming deal with pay-TV network Epix[3][4].

Company Overview

Netfix is a subscriber based service that allows customers to rent DVDs via both direct mail and online streaming. A dot-com era creation, it was started in 1997 by Reed Hastings in Los Gatos, California. Through a sophisticated and automated supply chain and an effective customer rating system, it has honed its competitive edge over long-time competitor Blockbuster in the subscription-based online rental space.

Business Features

Contents

1 Company Overview

1.1 Business Features

2 Trends and Forces

2.1 Opportunities to integrate with broadband-enabled devices allows for stable recurring revenue streams

2.2 The gradual popularity of online movie viewing forces Netflix to shift its focus to online streaming

2.3 Continued reliance on DVD shipments leaves Netflix at the mercy of the United States Postal Service (USPS)

3 Competition

3.1 Principle Competitors

4 References

Online Streaming: Netflix's core strategy is "to grow [their] streaming subscription business within the United States and globally."[5] Netflix subscribers have the ability to watch over 8,000 movies and TV episodes from the Netflix library directly on their TV via an Xbox 360, PS3, Wii or any other device that streams from Netflix. Subscribers can watch unlimited TV episodes and movies for a monthly fee of $7.99. [6]

Netflix sends you your movies: Subscribers choose which movies they want to rent at www.netflix.com. They can create a queue of films online and when movies are returned the next movie on their queue is shipped out immediately.

: The cost of sending movies back to Netflix is included in the subscription. Each DVD is sent in a reusable envelope that is addressed to the nearest Netflix facility.

No late fees: Subscribers

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