Many students will be familiar with, and possibly customers of, the key players in the industry. This case describes the history of Netflix and the movie rental industry. The case analysis and discussion can revolve around the specific strategic actions that Netflix should follow in this rapidly evolving industry. Many students will argue that there is little Netflix can do to stem the decline of the DVD market and that streaming is the obvious future of the industry. Astute students will see that Netflix is at the mercy of content owners, namely movie studios, for its livelihood. When content owners decide to distribute themselves (as many studios are now doing), intermediaries such as Netflix face the grim reality of disintermediation in the channel. However, if the history of the Internet has taught us anything, it is that market conditions always change.
1. What role will Redbox play in the development of Netflix’s strategic plans? How threatening is Redbox to Netflix’s future?
2. How will new competition from digital content providers force Netflix to alter its strategy?
3. What new opportunities do you see in the movie streaming business, or the entertainment industry as a whole?
4. Do you think Netflix will remain the dominant force in both streaming and movie rentals? Why or why not?
5. What could Netflix have done differently to ensure Qwikster’s success?