website: http://www.netflix.com/
Introduction
Netflix is the world's largest online DVD rental service, offering flat rate rental-by-mail and online streaming to customers in the United States. Established in 1997 and headquartered in Los Gatos, California, it has amassed a collection of 100,000 titles and approximately 8.2 million subscribers. The company has more than 55 million discs and ships 1.9 million of them to customers each day, on average.
Netflix has a Watch Instantly service features more than 12,000 movies and recorded television shows available. Major studios including NBC Universal, Sony Pictures, MGM, 20th Century Fox, CBS/Paramount, ABC-Disney, Warner Brothers, Lions Gate Entertainment and New Line Cinema are all distributing films and television shows via the service.
Recently, Netflix also announced a partnership with Starz Entertainment to bring 2,500+ new movies and television shows to Watch Instantly in what is being called Starz Play. Currently, the service is available only to PCs operating on the Windows XP Service Pack 2 or Vista running Internet Explorer version 6 or higher. The ability to view movies on other OS/Web browser configurations is still in development. The Xbox 360 console will be able to incorporate streaming in the late fall of 2008. Recent updates to the service have limited streaming media outputs to lower resolution displays.
Each month, Netflix provides movie entertainment to more than 8 million satisfied customers. Netflix topped the ForeSee Results’ Top 100 Online Retail Satisfaction Index with an American Customer Satisfaction Index score of 86, well over the industry average of 75.
Purpose
Netflix offers consumers an alternative, convenient and BEST way to rent as many DVDs as they want. There is no due dates, no late fees, and DVD shipping is free in both ways. Netflix also allows members the ability to watch movies instantly on their PCs with just a click of the mouse.
Features
Netflix is a Business-to-consumer (B2C) virtual storefront ebusiness model. Netflix, which manages through its electronic commerce website, serves the end products to consumers.
Netflix have from over 100,000 DVD titles - from classics to new releases and TV series for consumers to choose from. The company provides a monthly flat-fee service for the rental of DVD movies. A subscriber creates an ordered list, called a rental queue, of DVDs to rent. The DVDs are delivered individually via the United States Postal Service from an array of regional warehouses. Currently, there are more than 100 shipping points located throughout the United States. The subscriber can keep the rented DVD as long as desired, but there is a limit on the number of DVDs (determined by subscription level) that each subscriber can have on loan simultaneously. To rent a new DVD, the subscriber must mail a previous one back to Netflix in a prepaid mailing envelope. Upon receipt of the disc, Netflix ships the next available disc in the subscriber's rental queue.
Netflix offers various plans with different monthly subscription fees to cater the different needs of various customers. Its most popular plan cost US $16.99 (plus tax) per month, allowing a subscriber to rent up to three DVDs at a time, with unlimited exchanges. Other monthly plans range from US $4.99, for one disc at a time and a limit of two per month, to US $47.99 for eight with unlimited exchanges. For the three-out and eight-out plans, each rental slot costs the subscriber approximately US $6 a month. Netflix also sells gift subscriptions for various renting intervals, although the recipient must register using a major credit or debit card.
In addition to its movie rental service, Netflix also sells used DVDs to its subscribers. The purchase is delivered via the same system and billed using the same payment method as the subscriber's rentals.
In addition to its movie rental service, Netflix also sells used DVDs to its subscribers. The purchase is delivered via the same system and billed using the same payment method as the subscriber's rentals.
Through Netflix, consumers can also watch movies and TV episodes from a separate, smaller library instantly on your PC at no additional charge. Netflix has a "Watch Instantly" feature available to all eligible subscribers. The feature enables subscribers, at no additional cost, to stream near-DVD quality movies and recorded television shows instantly, depending on the subscriber's internet connectivity. Virtually all subscribers now are entitled to unlimited hours of streaming media at no additional cost. Only subscribers with a plan of $4.99/one DVD per month aren't provided unlimited access to the streaming service. (They are allowed two hours).
Key characteristics
Netflix is an e-commerce activity. It allows customers to rent, pay online, and to watch movies in the comfort of their homes. The system makes renting of DVDs convenient as customers will only need to collect their movie rentals from their own mailbox. There are no due dates, no late fee charges imposed on the customers. Customers can view and enjoy their movie rentals at their leisure and hold onto the DVDs for as long as they desired. There is free delivery and free returns for the movie rentals, thus customers will not incur extra charges when they receive or return the DVDs. Netflix prepaid mailing envelope are designed to prevent tearing or unauthorized access and this enhances security.
Designs
The website is user-friendly in several ways. Firstly, the website is not very wordy and the contents, instructions and explanations are clear and easy to understand.Secondly, customers can search their preferred DVDs by various ways. The movie library is sorted by genres, alphabetical order, ratings and popularity. Secondly, “Quick search” function makes searching for desired movies faster, easier and hassle-free. Thirdly, the “Help” section has the “Frequently Asked Questions” which new customers can refer to if they have any similar queries or they can email their feedbacks or problems to Netflix. Netflix community which can be directly linked from the main webpage serves as a forum to gather consumers, allowing them to give feedback, tips and recieve updates as well as reviews frequently. (http://community.netflix.com/) Lastly, information about a movie can be easily obtain by moving the cursor over the title. This gives consumer a glimpse of it and introduce them to more exciting movies which they might not have know about. Ratings displayed is a measure of popularity will aid consumer in better decision making. Below is an example of the summary displayed for the movie: National Treasure.
Strengths
As described throughout the report above, there are numerous advantages Netflix has through their business model. We will attempt to summarise the key strengths which this online based video rental store has over its brick and mortar counterparts.
Extensive library of more than 100,000 movies
Netflix have a wide selection of movies available. As a member, you'll be able to choose from any of their 100,000 DVD titles, including new releases, as well as over 12,000 movies and TV episodes such as The Matrix, Super Size Me, and The Office that you can watch instantly on your PC. As Netflix does not require any physical setup to display their available movies to customers, they are thus able to provide such a wide collection of movies to satisfy any movie enthusiast.
Simple and Convenient
Their web site is available 24 hours a day and makes finding movies simple and convenient. Customers are now able to search for and rent their favourite shows in the convenience of their homes. This is very important especially in a large country like United States of America where Netflix's operations is based, since travelling to malls to rent movies are extremely inconvenient especially in the more rural parts of the country. In addition, Netflix has included a "quick search" toolbar to allow customers easy asses to search for the movies they are looking for. Making the search faster and more efficient.
Free Trials! Free Delivery! & Free Returns!
Members just have to select their DVDs after sign-up and is will arrive in their mailbox in about 1 business day via U.S. mail. After finish watching a movie, they simply have to put it in its prepaid envelope and mail it back to Netflix. After they receive the returned DVD, Netflix will send the next available DVD from the customer list. Shipping is always free both ways — no hidden charges. Plus, customers can instantly watch movies and TV episodes instantly on their PC for no additional charge! In addition, new customers are given time to get used to this new concept of borrowing movies through Netflix's free trial system and are even rewarded with free rental for trying. The free returns and delivery and the low membership fees makes borrowing through Netflix a great value in comparison to the traditional dvd rental stores or kiosk. In addition there is no late fees involved provided the membership is still valid.
Watch Instantly
Netflix has a "Watch Instantly" feature available to all eligible subscribers. The feature enables subscribers, at no additional cost, to stream near-DVD quality movies and recorded television shows instantly, depending on the subscriber's internet connectivity. Virtually all subscribers now are entitled to unlimited hours of streaming media at no additional cost. Only subscribers with a plan of $4.99/one DVD per month aren't provided unlimited access to the streaming service. (They are allowed two hours). The bundling of these two services is a necessary component of Netflix's strategy. By doing so, Netflix will differentiate its services from the services offfered by its competitors and use this complementary goods to reinforce one another.
Weakness
Cancellation fee
Customers may cancel your membership to Netflix at anytime, and cancellation will be effective immediately. They do not provide refunds or credits for any partial -month membership periods or unwatched movies. Upon cancellation, customers will be given seven days to return any outstanding rentals. Failure to return such rentals will result in customers being billed for such items.
Delivery waiting time
Also, delivery will take approximately 2-3 working days to reach customers. Hence, impatient customers will rather not wait since there are many other alternatives available. Customer can choose to go to the stores or simply go online and watch videos online. In this way, Netflix may stand to lose many potential customers.
Payment Method
Payment is by way of credit cards (currently only MASTER CARD and VISA credit cards). Hence some customers may not prefer their credit card details to be given over the internet due to security issues and may not use such a service. In addition, the younger audiences are also deprived of such payment methods and hence unable to use the service.
English only based website
Netflix website is based in English only. This may thus allow only customers who are English literate to use the website. Hence the minority audiences who are less proficient in the English language may not be able to use this service.
Critical Analysis and Conclusion
Netflix’s business model has allowed it to thrive in the DVD rental market, but with the advent of Video on Demand (VOD) services, the DVD format of watching shows is fast losing ground as the leading format for viewing movies. Netflix can prepare to eventually make a full transition from the DVD rental market to the VOD market by entering the streaming movie market today. Hence by introducing their new online video streaming service to tie in with its DVD service, Netflix will be able to differentiate from its competitors and brace itself should DVDs become outdated in the future. Meanwhile, its streaming service will serve as a complement to its DVD rentals for several years to come. It is imperative that Netflix take advantage of the opportunity to enter the VOD market now while they are still a leading player in the DVD rental industry before its too late. Simply, they cannot afford to be couch potato on this.