INSY 2301 Lecture Notes - Lecture 5: First-Sale Doctrine, Netflix
22 Jun 2018
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Course
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Case Study: Netflix
Introduction to Netflix
Started as a DVD rental business (30-day rental period)
oCustomers could select DVDs online and receive them in the mail
Fought to maintain industry dominance in the face of major technology changes
oTransitioned to a streaming model with an optional DVD rental add-on
Largest subscription streaming service
Netflix’s Brand Strength
In going public, Netflix had to release its financial position
oDisclosure led to two new competitors: Blockbuster and Walmart
Netflix managed to keep its lead by providing positive customer experiences
oAutomated distribution centers facilitating overnight DVD deliveries
oEconomies of scale attracting content providers in order to provide customers
with a wide selection
oLeveraging the long tail; providing access to demanded, but less popular, items
that other retailers don’t offer
Leveraging Data
Gathers and leverages user data to provide better customer experiences
oContributes to building the Netflix brand
Utilizes a proprietary recommendation system called Cinematch
oUses collaborative filtering (software that monitors trends among customers
and uses the data to personalize the individual customer experience)
oActs as a switching cost, since changing platforms would reduce customization
Atoms to Bits
Phrase representing the shift from physical products to digital products
oExample: Netflix shifting from DVD-by-mail to streaming
Poses new challenges and opportunities
oNew avenues for revenue and growth
oNew competitors, new potential partnerships
oChanging legal and regulatory environments
oShifting content availability and acquisition costs
Content Acquisition
find more resources at oneclass.com
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Document Summary
Started as a dvd rental business (30-day rental period: customers could select dvds online and receive them in the mail. Fought to maintain industry dominance in the face of major technology changes: transitioned to a streaming model with an optional dvd rental add-on. In going public, netflix had to release its financial position: disclosure led to two new competitors: blockbuster and walmart. Gathers and leverages user data to provide better customer experiences: contributes to building the netflix brand. Utilizes a proprietary recommendation system called cinematch: uses collaborative filtering (software that monitors trends among customers and uses the data to personalize the individual customer experience, acts as a switching cost, since changing platforms would reduce customization. Phrase representing the shift from physical products to digital products: example: netflix shifting from dvd-by-mail to streaming. Poses new challenges and opportunities: new avenues for revenue and growth, new competitors, new potential partnerships, changing legal and regulatory environments, shifting content availability and acquisition costs.
