INSTRUCTIONS

Answer the questions below in essay form after reading the article. Make sure to perform an in-depth analysis AND provide strong support (i.e., graphics, data, videos, links to other sites) to corroborate points in your analysis.

Questions

1. Of the Three A's, given that managers have limited time, energy, and resources ($'s), how would you value and prioritize: Affordability, Accessibility and Availability? What would you value and prioritize most? Least? Why? Explain briefly.
2. This case study looked primarily at opportunities for Netflix to pursue at scale globally. What threats might prevent Netflix from achieving their goals? What should leaders and managers keep in mind? (e.g., competition [Amazon, Apple, Disney, etc.], consumer privacy [hacking into company databases], consumer behavior [Illegal access, price points/sensitivity in less developed countries, etc.])
3. Are you optimistic or pessimistic about Netflix's future? Why? Explain briefly.

ARTICLE

Consumer Behavior and Netflix's Business Model

How do you watch movies? Do you go to the local movie theatre where you live? Do you watch films on your laptop? Or, do you view films and your favorite TV shows on your smart phone or tablet when you are on the go? Perhaps all of the above, depending on where you are at a certain time or place.

Much of Netflix's historical success relates to building on strengths, such as video content, and maximizing technological opportunities, to deliver the right product, in the right way, at the right time, to the right customers.

Initially, the Netflix business model capitalized on consumer entertainment preferences and behavior by placing a big bet on the "laziness factor". That is, people will find it more convenient and preferable to not leave their home/sofa to get a movie if the price is reasonable. At the time, the Netflix DVD rental business was an alternative to the more traditional "brick and mortar" retail giant, Blockbuster video. Over time, it evolved to an online video streaming service provider to attract more customers and better satisfy current customers based on their desire for comfort and their willingness to pay for the service.

Evolving Business Model: The Three A's

So, as we look to the future, what's likely in store for Netflix?

Predicting the future is hard and this is also true for Netflix; however, in one sense, the more things change, the more they will likely stay the same at Netflix. That is, leadership will likely continue to build the company and propel growth around the three A's that help characterize disruptive innovations: Affordability, Accessibility and Availability.

Affordability: The Netflix subscription-based business model will likely continue to focus on offering exceptional "value for money" to current and future customers. To achieve its two primary marketing goalsacquisition and retentionin the future, Netflix has developed extensive data-driven behavioral customer profiles. These profiles reflect a deep understanding of who their customer is and what he/she needs, wants, and will actually pay for. To acquire new customers and to retain and grow their loyal current customers, leveraging a value proposition that centers on affordability is likely critical to success.

Accessibility: Part of delivering on a strong "value for money" proposition is accessibility. At present, Netflix accesses consumers from around the world, primarily from developed nations. Again, with this access has come a deep understanding of consumer behavior globally. In fact, with the ubiquitous internet and improved online streaming speed internationally, Netflix is well-positioned to not only retain current customers in developed nations but to also target audiences (with growing disposable income and high-speed internet access) in less developed countries.

Availability: Netflix's world view is expanding beyond traditional geographic borders. For instance, Netflix offers content within both a global and local context as well as in different languages. At the same time, Netflix continues to improve their distribution by partnering with local cable companies and movie and TV show internet aggregators and influencers. In short, Netflix's expanded worldview, growing content, and strategic partnerships are driving and supporting their future growth aspirations.

Yet, world domination for Netflix is unlikely. There are many committed and well-resourced competitors now. Nonetheless, Netflix's ability to develop and deliver (at scale) more content to more people around the world is remarkable. So, for users that are on the go and globally dispersed, Netflix will likely continue to creatively evolve their business model around the three A's to meet changing consumer needs and wants: anytime, anyplace, anywhere.

Taken together, these three A's serve as a starting point and as building blocks for innovation and providing a sustainable competitive advantage. So, what started as a low-end niche competitor to Blockbuster is now a mainstream leader in the competitive, high stakes entertainment industry.

The movie wars look like they are heating up. Stay tuned!