Over the last ten years, Netflix has built for itself a name that inspires trust among its customers. It is seen as an innovative company that is in tune with the latest technology. Netflix’s top strategic team is aware of its technological advantage and is actively working towards retaining this technological edge. This is an important advantage that Netflix has when compared to its competitors.
Another advantage for Netflix is its extremely lean cost structure which allows the company to provide low prices while still being profitable. With a fulfillment cost of about half as that of Blockbuster, Netflix is a much more profitable company while still being able to offer lower prices.
Also, Netflix has a huge and loyal customer base. The company has a churn rate of as low as 6%, which means that most people who join Netflix usually remain loyal to the company. One of the main reasons for such a loyal customer base is the company’s attention to customer satisfaction. They also have an excellent advertising strategy and a huge advertising budget compared to their competitors, which helps them reach all sections of the audience.
While Netflix has a huge selection of titles and is signing deals with studios to ensure that it continues to receive new and exclusive content, in this area, it faces stiff competition from Blockbuster, which has better relations with studios. Hence, the biggest challenge for Netflix will be to ensure that it continues to offer to huge and unique selection to its customers.