Major Shifts in Netflix Strategy Essay

Compare megahits and Netflixs attain models and assess prompting prior to the establishment of Blockbuster online Blockbusters Value Proposition and Profit Models By establishing everyplace 5000 locations to represent 70% of the U. S. population by a 10 minute drive, Blockbusters value trace is its convenience by geographic location. The physical convenience as well as naturalised brand name made the Blockbuster experience attractive to potential movie rental customers. Their profit models were based highly off of their utilization of shelfspace.Most prominent shelf space would be dedicated to the newest releases. An opposite part of Blockbusters profit model was to maximize the number of days a video was rented. This financial aspect of the profit model allowed more than rentals, thus more revenue. belated fees contributed to Blockbusters profit model in two ways.The fees accounted for $600 million or 10% of Blockbusters revenue in 2004. They in like manner enhanced th e companys consistency in seasonably rental returns. Since customers usually want to avoid late fees, returning their rentals in a meterly airallowed the videos to be rented by another customer. Netflix Value Proposition and Profit Models Netflixs key value proposition was offering a completely different format of movie rental. Not only did Netflix offer its increase through a different channel (the internet), but they also focused on utilizing videodisks, which was at the time considered early-? technology. The popularity of both the internet and DVDs were increasing at the time of Netflixs launch. With an increase in popularity of new technology, Netflixs unique service offering became veryattractive among the early-? adopters of these technologies. The utilization of a subscription-? based service also added to its value proposition.Enabling subscribers to exchange DVDs as frequently as they wanted made Netflix even more attractive. One aspect of Netflixs profit model was i ts marketing strategy to only target DVD consumers. By developing a cross-? promotional program with manufacturers and retailers of DVD players, Netflix did not waste marketing to other consumer groups who dont have the new technology to even use DVDs. In regards toNetflixs operative aspects of its profit model, Netflix expansion of nationwide distribution contracts contributed to the companys efficient process. The expansion improved pitch time and also nationwide coverage. Also, the low costs of investing in an additional distribution center further added to the companys profit model. 2) List each major shift in Netflixs Strategy The first major shift in Netflixs strategy was the transition to a pay subscription service. Netflix realized its original pricing strategy of paying $4 for reach rental was