Netflix

Netflix provides entertainment to millions of people threwout the United States, Canada, Latin Amerca, the Caribbean, United Kingdom and Ireland.  "Netflix was founded in 1997 in Scotts Valley, California by Marc Randolph and Reed Hastings, who previously worked at Pure Software.  Hastings was inspired to start the company after being charged late fees for returning a rented copy of Apollo 13 after the due date" (2012).  Netflix charges a base rate of $7.99 to watch  the thousands of Movies and TV series probivided.  "The company has built its reputation on the business model of flat-fee unlimited rentals without due dates, late fees, shipping or handling fees, or per title rental fees" (2012).  The following link from the New York Times illustrates how the revenue for Netflix has increased from 2004-2010 into a billion dollar company: http://www.outsidethebeltway.com/chart-of-the-day-netflix-v-blockbuster-edition/

As of this current date, Netflix provides only the service of the unlimited movie and tv series rentals for a base monthly cost.  While Netflix can be used by any individual of any age, the main target audience is to adults between the ages of eighteen and forty.  Netflix is internet operated, therefore to use this service customers must have internet.  Customers may run internet threw their wii or playstation to watch movies threw their TV or simply watch movies on their computer.  The demand for this product is growing rapily as seen in the above link.  As demand increases, the increasing number of consumers will increase the profit dramatically.The supply of this service is increasing as Netflix is making deals with production companies to make their movies available on their webiste for subscribers to watch.  The primary stage for such a service is when the movie or tv show is physically being recorded.  The second stage involves the movie being put onto a DVD to sell to the public.  In the tertiary stage Netflix receives the right to display the movie on their website for customers to view.  In 2011, "the Los Gatos, Calif-based DVD and digitcal video-rental service said it wearned $60 million, or $1.11 a share, compared with a profit of $32 million, or 59 cents a share, in the same quarter a year ago.  Revenue rose 46% to $719 million" (2012). 

The strongest competitor Netflix must compete against would be Pay-Per View channels, as DVD rental stores are slowly becoming obsolete.  Theatres may also be a competitor as some individuals want to see a movie as soon as it comes out.  The competitive advantage Netflix has is definitely its low price and unlimited rentals.  It is convenient to be able to watch thousands of movies from your home without having to run out to a rental store to pick one up, and then have to take it back on a certain date.  The fact that Netflix is only $7.99 a month is why it has become so popular.  If a customer watches four movies a month on Pay-Per View it would cost approximately $32.  It costs approximately the same price to rent one movie at a rental store, as compared to a months worth of unlimited movie on Netflix.  A possible weakness of the company is that they are limited to only the movies of certain production companies of which they have made a business deal with.  The profit of Netflix continues to grow as they expand the business offering more movies. 




References: 

Chart of the Day:  Netflix v. Blockbuster Edition.  2003-2012.  http://www.outsidethebeltway.com/

Netlix.  2012, February 13.  http://en.wikipedia.org/

Netlix Profits Climb 88% as Subscribers Soar.  2012.  http://www.marketwatch.com/