Sunday, February 13, 2011

Netflix

What do you think is the best long-term strategy for Netflix, given the recent growth in popularity and competition in the market for online streaming content?


Netflix is a great example of adjusting its strategies based on the user feedback and changing environments, either internal or external. It started with a pricing model similar to the one used by traditional video stores: $4 per movie plus $2 shipping and handling charge and late fees. Customers voiced their frustrations and Netflix switched to no-late-fee subscription model. A great way to differentiate itself from brick-and-mortar competitors and bring more value to customers. Another example is moving from no direct relationships with major studios to direct revenue-sharing agreements with nearly all of them.
To sustain its position as a giant in the media industry, it needs to pursue a long-term strategy with several moves:
1. Continue the close watch of VOD developments and adjust the strategy accordingly. Partner with key IT players in this trend since as Sarandos explained "What we do is probably 70% science, 30% art." To live up with the three strengths: convenience, value, and selection, Netflix definitely needs to invests continuously in IT.
2. One primary limitation of VOD is content availability. Netflix can add more content to serve the "long tail" community by reaching out to more foreign major studios. As Chris Anderson pointed out in "The Long Tail", with this new economics, in which it matters not where customers are or how many of them are seeking a particular title but only that some of them exist, anywhere. With more diverse content, Netflix can both satisfy current subscribers and attract more new customers.
3. Add more "extras" on Netflix. 
When users select a title to watch instantly, Netflix offers services such as Order Foods and Drinks and Share with Friends. If the users select Order Food and Drink, Netflix can give recommendations based on their history, the statistics of others watching the same title, and the ratings. The idea is similar to movie recommendations. The users can choose to enter their inputs. To make this work, Netflix needs to partner with restaurants. Share with Friends is letting the users' friends know that the users are watching this movie now. The purpose is that their friends can pick that movie to watch, too and later on, they can discuss the movie.
When users select a movie for their queues, Netflix displays the list of their friends who have already watched it. This way, the users can have reviews from their friends, making the reviews more likely to be reliable and valuable. Netflix can partner with Facebook, Twitter, or other social media.
After users watch a movie, Netflix displays All About <the movie title>, for example All About Finding Nemo. It is basically a store where users can buy CDs, books, posters, toys, games, clothes, and anything related to that movie. 
The ultimate goal is to deliver more content instantly and conveniently, more relevant services, and greater viewing experience.  

3 comments:

  1. Tran, interesting ideas to increase international video options and add "other product options" to the rental process. The former idea seems to make sense as it would for any company growing beyond the bounds of it's native country. The later idea might be attractive to some folks. I can imagine someone ordering a movie and then ording a dominos pizza online (through a pretty cool interface that dominos has BTW). 30 minutes into the movie, pause to get the pizza. This could be a really nice value add for Netflix.

    ReplyDelete
  2. While I like the idea of integrating food ordering I think this could also get annoying for consumers and gets away from Netflix's core business model. They would need to find a way to make this feature non-intrusive but still visible enough for consumers to know it is there and that is a hard thing to balance.

    ReplyDelete
  3. For integrating food ordering, I think UI experts from Netflix should find good designs. A few options:
    1. Users can set in Settings if they want to see the food ordering options after they're done with selecting a movie.
    2. Offer only as a link after they're done with selecting a movie: Food ordering. Users clicking on this link will be directed to food ordering screen.
    3. Put this on the left or right column as a menu item. Users can click on this link at anytime, not having to wait until after selecting a movie.

    ReplyDelete