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  • May 2007 (Revised April 2009)
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Netflix

By: Willy C. Shih, Stephen P. Kaufman and David Spinola
  • Format:Print
  • | Pages:15
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Abstract

Reed Hastings founded Netflix with a vision to provide a home movie service that would do a better job satisfying customers than the traditional retail rental model. But as it encouraged challenges it underwent several major strategy shifts, ultimately developing a business model and an operational strategy that were highly disruptive to retail video rental chains. The combination of a large national inventory, a recommendation system that drove viewership across the broad catalog, and a large customer base made Netflix a force to be reckoned with, especially as a distribution channel for lower-profile and independent films. Blockbuster, the nation's largest retail video rental firm, was initially slow to respond, but ultimately rolled out a hybrid retail/online response in the form of Blockbuster Online. Aggressive pricing pulled in subscribers, but at a price to both it and Netflix. But a new challenge was on the horizon: video-on-demand. How should Netflix respond?

Keywords

Business Model; Film Entertainment; Disruptive Innovation; Growth and Development Strategy; Distribution Channels; Service Delivery; Renting or Rental; Competitive Strategy; Motion Pictures and Video Industry

Citation

Shih, Willy C., Stephen P. Kaufman, and David Spinola. "Netflix." Harvard Business School Case 607-138, May 2007. (Revised April 2009.)
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About The Author

Willy C. Shih

Technology and Operations Management
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Related Work

    • August 2014
    • Faculty Research

    Netflix in 2011

    By: Willy Shih and Stephen Kaufman
Related Work
  • Netflix in 2011 By: Willy Shih and Stephen Kaufman
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