Missing Information and Assumptions
The case is rich in detail and recounts the history and evolution of Netflix since its inception. So, thanks to this thoroughness, there is no need to assume or seek missing information.
Statement of the Problem
Netflix’ problem is presented by the fact that today even streaming video is fast becoming passé. The new buzzword is ‘downloadable content’, which people can watch in any device of their choice. Fully digital competitors like Apple, Hulu, Google Play and YouTube are giving Netflix a run for its money. Amazon has tapped into its strong goodwill and has struck deals with complementing business partners. Apart from its Instant Video service, Amazon has also partnered with Roku’s Digital Video player for seamless transfer of content from remote servers to television screens. Indeed the cross-platform feature now covers Kindle Fire, PlayStation and Blu-ray players. While business process innovation has been the chief strength of Netflix over the years, technological innovation is not its forte. This makes the task of taking on fully digital competitors all the more daunting.
Development of Alternatives
There are a few strategy alternatives that Netflix could pursue in its quest for leadership within the industry:
First, a reasonable alternative is to consolidate on the first-mover advantage in core business areas. Here, major competition comes from platforms such as Apple iTunes and Google Play. These technology giants are able to retain their mobile phone customers into the entertainment business. With platforms such as mobile phones and tablets gaining upper-hand over conventional PCs or laptops, Netflix is in a tight corner. For the company to remain relevant in this multi-cornered race it is imperative to focus on technological innovation and striking key strategic partnerships. Partnerships and promotional packages with mobile phone manufacturers is a good strategy. This makes sense when one considers Netflix’ earlier deals with DVD player manufacturers during the heydays of rentals. While companies like Apple and Google specialize in their niche, Netflix has the advantage of being a multi-platform offering. Indeed, this is a great advantage over other competitors who are either restricted by hardware, software or delivery platforms.
Another alternative strategy is to become a marketing centric enterprise. Netflix was able to reach leadership position due to innovative cross-sector promotion partnerships. The most notable being its agreements with DVD hardware manufacturers and studios. Subscription to Netflix was offered free or subsidized with the purchase of DVD players. This grand partnership roped in such hardware giants as Hewlett-Packard, Toshiba, Sony, Pioneer and Apple. Likewise, the tie-ups with America’s leading film studios, including MGM, Warner Home Video and Columbia Tri-star, is now part of the company’s lore.
Thirdly, looking to achieve business consolidation through customer relations is also an alternative strategy. Netflix had historically always linked its prosperity to customer satisfaction. After reaching economies of scale, the company was now stable enough to adopt a subscription-only model. Its beginning package was $19.99 per month for unlimited lending of DVDs. The only condition being that only 3 DVDs could be held by the customer at a time. This was received very positively by customers who are now able to watch more movies for the same expenditure. Customers also appreciated the elimination of late-fee and item handling charges.