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  EXECUTIVE SUMMARY  Netflix is one of the well known media-services providers in today's generation, netflix has gone through times where the company experienced many fall and uprise. Netflix was incorporated on August 29, 1997 in Los Gatos, California by Reed Hastings who is the Chief Executive Officer of Netflix. Netflix provides services such as mail-order DVD programs as well as internet streaming video-on-demand. In 1975, Video Cassette Recorder (VCR) became widespread in the Japanese market later became Video Home System (VHS) and expanded in the global market. Then Compact Disc (CD) was introduced to the mass and stimulated the creation of Digital Versatile Disc (DVD) which was large enough to hold an entire movie in digital format. Netflix used the DVD as their rental for movies, they first used Marquee Program which allowed the customers  pay $19.95 per month to rent one DVD and to select three DVDs to rent in the future. Marquee Program expanded the subscribers of Netflix. In 2011, Netflix used also different strategy to improve the services to its customers like adding an online streaming portion of its business. Adding an online streaming portion, being said at that time internet was not a widespread thing to the population, created a backlash from the subscribers. To resolve the backlash, Hasting announce that the Netflix would split the DVD by mail company and the stream in demand company into two business entities with the latter being called the Qwiskster and the former to remain as Netflix. This caused the subscribers outrage and dropped both the stock price and the number of the subscriptions. Hasting then halted the decision he announced, and continued as a single entity. The movie rental industry have a powerful competition, which makes the Blockbuster, Hollywood Entertainment, and Redbox the competitors of Netflix. But later on, Blockbuster and Hollywood Entertainment lead to its bankruptcy because of the hard competition in the industry. Through partnership with several companies, Netflix expanded its services worldwide and provided more convenient services. The external and internal environment are also factors to consider that affects the operations of Netflix. The proponents will elaborate on the factors that affect the operations and services of  Netflix to come up with a suggested solution for the problems that the Netflix encountered.  EXECUTIVE SUMMARY  Netflix is a media service provider and production company incorporated on August 29, 1997. Reed Hastings founded Netflix mainly because of his frustration on paying overdue fees for the movie Apollo 13. Netflix offers media to subscribers via internet and via email that allowed the customers to rent digital video discs (DVD) over the internet from the ease of their homes. In 1999, Netflix opened their main distribution center in San Jose, California and created the Marquee Program that allows the customer to pay $19.95 per month to rent one DVD at a time.  Netflix expand its operations in 2001 with the Marquee Program allowing the customers to rent 3 DVD at a time with no postage in shipping fees. In 2003, Netflix has reported its first revenue of $272 million and had mailed nearly 200,000 discs per day. Over the next few years, Netflix has reached to 20 million subscribers and implemented the online streaming of movies that allows the customer to watch the movies conveniently in their computers rather than receiving the DVDs by mail. In addition, Netflix has lowered their prices and became the world`s largest media service provider and production company. In 2011,  Netflix placed a 60% price increase on all subscribers with DVD by mail services or streaming services and Hastings decided to split the DVD by mail company and the stream on demand company to be more focused on each aspect rather than collectivity. With that, Netflix has lost over 800,000 subscribers because the customers were outraged as they have to monitor two separate accounts.  Netflix still maintain to be on top despite of economic recession and rapidly changing technology because the company is more invested in innovation and their creation of Marquee Program that makes it easier for the customer to rent DVDs. Robert Stammers said that “Netflix has built a recession proof company”. One of the factors that greatly contributed to the brand`s growth was their partnership with different companies to make it more accessible and convenient for the customers to watch movies in other software and electronic devices. Netflix is also invested to their corporate culture and credited itself as a progress-intensive business which means that they measure success with the result of work rather than the output from the employee.  EXECUTIVE SUMMARY  Netflix is one of the most innovative business idea way back 90s’. Chief Executive Officer, Reed Hastings lead its way to the top, overtaking big competitors. Because of his innovativeness and leadership, Netflix found its way to rise to the top. From the traditional DVD renting, Netflix think out of the box and decided to use the internet for better and faster transaction of renting DVDs. However, it is not solely an effort of the CEO instead it is also from the cooperation of employees. They loved their jobs because they have more opportunities and autonomy.  Netflix was incorporated on August 29, 1997 and the retail operations begin on April 14, 1998. Los Gatos, California was the official site of Company headquarters. Netflix has number of competitors like Blockbuster, Hollywood Entertainment, and Red box. The first investment of Netflix was from Reed Hastings’ o wn money in capital worth $2.5 million. In 1999, a main distribution center was opened and created the Marquee Program, which allowed customers to rent one DVD at a time and three DVDs to rent in the future, it costs $19.95 per month. However, Netflix doe sn’t have a policy for due dates and late fees and it is the first of its kind. For that reason, the Marquee Program became one of the most significant factor for Netflix’s success. Next program created was CineMatch, which provided customers video title recommendation based on their ratings and different information of themselves. In 2001 the Marquee Program already allowed customers for unlimited rentals and lower cost of $17.95 per month. In 2002 Netflix already sold 5.5 million shares of common stocks for $15 per share in the Initial Public Offering or IPO. Later on that year, Netflix continue to grow by selling more share of stocks. They also expand their business and branched out to serve more costumers. In 2004 a decrease to $15.95 per month on their subscription cost.  Netflix grow by one million subscribers in 10 months and reached over three million subscribers in 2005. Over next few years, Netflix grow up to 20million subscribers, and they start to implement an online streaming portion of the business. The new streaming options increase  Netflix’s online capabilities and were been quickly popular through the costumers that they don’t want to rent DVDs anymore. Management placed 60% increase on all subscribers  because of added servuces costing $15.98 per month or $7.99 per one service. For this reason, Hasting stated that Netflix would split the DVD by mail and by stream into two business entities with the latter to be called Qwinkster and the former to remain Netflix.  EXECUTIVE SUMMARY  Netflix, Inc. (Netflix) is a retailer of movie rental services. It is the leading provider of online movie rentals not just in the United States, but also in countries where the company started offering streaming services like in Canada, Latin America, the Caribbean, the United Kingdom and Ireland. The company offers an internet subscription service for the enjoyment of TV shows and movies, where subscribers can instantly watch unlimited TV shows and movies streamed over the Internet using their computers and offers DVDs to its subscribers with free delivery, through DVD mail subscription. The company, under the leadership of their CEO Reed Hastings, plans to reach their goal of global profitability before they intend to commence additional international markets. They partnered with several companies, like Roku and Sony and Panasonic, which later  became a key aspect of Netflix’s brand growth. Hastings believed that the culture of the company has innovation as a critical component. He therefore sought the most creative, innovative, and accountable individuals to establish an entrepreneurial environment to generate ideas.  Netflix, as a pioneer in entertainment distribution, already has dominance in the domestic arena. Considering the United States as their domestic arena, members in the said country can receive DVDs delivered quickly to their homes. Moreover, Netflix catered three demographics and these are (1) individuals that prefer movies delivered to them at home for free, (2) movie fanatics that liked a vast array of foreign films or independent films, and (3) “bargain hunters” that liked to watch several movies for one low flat rate. With less to worry about, Netflix can dedicate time and resource toward international growth to achieve global  profitability by continuously enriching our members' experience  –   building up the streaming content, with a focus on programming an overall mix of content that gratifies its subscribers. Despite the company had been maintaining a strong innovative culture and even surviving during tough economic times, the company still tried to institute structural and  pricing changes which led to the outrage of the customers. Subscribers left and the stock prices  plummeted by the end of 2011. As time goes by, the Netflix brand became synonymous wi th the term “video on demand” and later became synonymous with “binge - watching”. It began to be recognized internationally but this one crucial decision led their business go downhill.


Sep 22, 2019
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