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  • August 2014
  • Case
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Netflix in 2011

By: Willy Shih and Stephen Kaufman
  • Format:Print
  • | Language:English
  • | Pages:21
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Abstract

Reed Hastings founded Netflix to provide a home movie service that would do a better job satisfying customers than the traditional retail rental model. But as it encountered 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 a 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—the rapid growth of the company's online streaming service, which had a very different business model. Hastings' efforts to separate the activity into two separate companies met with strong pushback from consumers and the press. What was the best path forward?

Keywords

Netflix; DVD; DVD-by-mail; Streaming; Online Entertainment; Online Video; Disruptive Innovation; Innovation and Management; Innovation Strategy; Business Model; Disruption; Operations; Service Operations; Entertainment; Film Entertainment; Television Entertainment; Media; Strategy; Business or Company Management; Competitive Strategy; Competitive Advantage; Corporate Strategy; Expansion; Technology; Technology Adoption; Technology Platform; Web; Entertainment and Recreation Industry; United States

Citation

Shih, Willy, and Stephen Kaufman. "Netflix in 2011." Harvard Business School Case 615-007, August 2014.
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About The Author

Willy C. Shih

Technology and Operations Management
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Related Work

    • October 2014
    • Faculty Research

    Netflix in 2011

    By: Willy Shih
Related Work
  • Netflix in 2011 By: Willy Shih
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