Critical Factors of Netflix’s Success

Subject: Recognizable Brands
Pages: 2
Words: 306
Reading time:
< 1 min

The video rental business is an extremely competitive business. Netflix faces stiff competition not only from the traditional brick-and-mortar video rental companies like Blockbuster but also from newer technologies such as “Video-on-demand”. Additionally, newer technologies are constantly becoming available, which poses a further threat. Under the circumstance, if Netflix hopes to remain competitive, it must continuously reinvent itself.

When Netflix first started its business in 1998, online movie rental with no late fees was a novel idea. However, as Netflix’s business model became successful, other companies also adopted this strategy, eroding Netflix’s uniqueness. Netflix did the right thing in allowing its customers the movie download option. However, Blockbuster, having learned its lesson, was also quick to offer this option on its site, once again eroding any advantage that Netflix might have had. Hence, Netflix must now come up with other differentiating features to ensure that its offerings remain unique and can attract more customers.

Another potential issue for Netflix is content. Blockbuster is signing exclusive deals with studios, which would make it impossible for Netflix to carry certain titles. This kind of deal could prove to be a big blow to Netflix’s business. Hence Netflix also needs to sign similar exclusivity deals with major studios to ensure that it maintains the competitive edge. Besides remaining on the cutting edge of technology and maintaining huge and, if possible, exclusive content, Netflix must also ensure that its customers remain highly satisfied to minimize churn rate. Other competitive strategies include further reducing the costs so that it can offer even lower prices, which would attract and retain more customers. In short, Netflix must keep a keen eye on the latest trends and what customers want and deliver it to them at the right time so as to remain competitive.