Netflix: David Becomes Goliath

Netflix is considered a classic example of innovative strategic planning. From the outset, it was designed primarily as an internet-based company, unlike its principal rival, Blockbuster. The early history of Netflix is a study in looking forward to gaining and keeping a competitive advantage. Remember Porter's Competitive Forces Model as you read this chapter. The pressures of all five forces are present as Netflix tries successfully to enter and eventually command a competitive advantage in the rental film industry. As you read the case of Netflix, consider the following question: What are the long-term threats to Netflix? (Hint: Consider changes in technology and copyright/patent/media law). How would Netflix overcome or avoid those threats and continue to have a competitive advantage?

From Atoms to Bits: Opportunity or Threat?

Key Takeaways

The shift from atoms to bits is impacting all media industries, particularly those relying on print, video, and music content. Content creators, middlemen, retailers, consumers, and consumer electronics firms are all impacted.
Netflix's shift to a streaming model (from atoms to bits) is limited by access to content and in methods to get this content to televisions.
Windowing and other licensing issues limit available content, and inconsistencies in licensing rates make profitable content acquisitions a challenge.