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How To The Analysis Of Netflix Architecture And Business Model ?

Institutional Background

The technological strategies of an organization generally refer to the overall plan of the organization that consist of the various objectives, principles and the tactics that are related to the use of the various technologies that are implemented by the concerned organization. These strategies are majorly focused on the concerned technologies that are implemented by the organizations as well as the employees of the organization that deal with the proper implementation of the concerned technologies (Dodgson 2018). The technology strategies of the organization might also deal with the efficiencies displayed by the concerned business organization in the matters that pertain to the expenditure of the company on the various technologies that are implemented by the same. This might also refer to the exploitation of the technologies that are implemented within the concerned organization in order to assist the value creation of the same (Grant 2016). The following report deals with the technological features that are put forth by the American entertainment magnet, Netflix. The report opens with the institutional background of the two famous entertainment providers of America, Blockbuster and Netflix. The report advances to discuss the various ways in which Netflix has emerged to be one of the highly advantageous competitors of Blockbuster. In this section, the report discusses the changes in the technologies as put forth by the concerned company, the advantages of the online operations over the retail outlets, the pricing strategies and the other innovations that are implemented in the technological matters that are practiced by Netflix. The report further proceeds to reflect on the incidents wherein Netflix had faltered as well as the areas wherein the company had put forth the signs of rebuilding by putting forth the original contents within the various types of the entertainment materials that are provided by the company. The report finally nears its end with a reflection on the future of the concerned entertainment company of America, Netflix.

Blockbuster LLC, commonly known as Blockbuster, is one of the providers of the rental services in the fields of home movies and the video games through the various rental shops, video on demand services, streaming services, DVD-by-mail services and the services that pertain to the movie theatres. The services got popular in the 1990s and gained even more popularity in the year 2004. During the peak years of the services, the company in discussion is known to have employed a workforce of around 84,300 people who had been serving the concerned company at the various locations wherein the company has been existing (Blockbuster.com. 2018). However, the concerned company had been facing issues since the up rise of the various competitors in the field like the Netflix that provided services against the orders that were delivered via mail, the automated kiosks by Redbox and other such services that provided videos on demand. The rise of the competitors of the organization had ultimately led to the conditions wherein the company had to file in the petition for the protection of the concerned company against the conditions of bankruptcy after the loss of a significant amount of revenue during the initial years of the twenty-first century. The stores that were owned by the concerned entertainment provider were taken over by a provider dealing in satellite televisions, Dish Network, responsible for the current operational status of the few stores of Blockbuster that are still existent in the present times.

A brief history of Netflix

Founded in the year 1997, Netflix is one of the celebrated providers of the media streaming, the DVD-by-mail services and the online services pertaining to the video-on-demand. The company is headquartered at Los Gatos, California, United States and was situated in the Scotts Valley, California during its foundation by Marc Randolph and Reed Hastings. The company had initially started out as a company that deals in the sales and the rental services involving the DVDs and had expanded to focus on the mail rentals under the influence of one of the founders of the company, Reed Hastings (Netflix.com. 2018). The entertainment company had put forth an expansion in the business by introducing the streaming of the media in addition to the various other services that were offered by the concerned entertainment provider. The company had ingrained the internationalization activities within the services in the year 2010 by making the video-streaming available to the clientele of the organization who were based in various countries all over the world. The company had been operating in 190 countries all over the world as reported in January, 2016. The company is observed to have been producing the content since the year 2012, the first of the produced content being a series known as Lilyhammer. The total revenue amount earned by the company in the year 2017 amounts to a huge figure of 11.692 billion US$ while the number of employees of the concern is limited to 5400 all over the world (Netflix.com. 2018).

The changes in the technological factors has helped Netflix to gain advantage over Blockbuster. The concerned management at Netflix had displayed the understanding on the fact that there was an imminent change that was upcoming in the field of the rentals in the movie and streaming of the various entertainment in the form of movies and other television series. This had led the concerned management of the concerned to implement the services wherein the movies could be streamed flawlessly and over the internet thereby catering to a greater number of clients. The services that were introduced by Netflix tended to be cheaper than the services offered by the competitor of the concerned entertainment magnet, Blockbuster (Rodriguez 2018). The scenario of the then market of entertainment had hinted at the upcoming trend of streaming of the various movies over the internet than the rentals that dealt with the distribution of the DVDs of the concerned movies. The authorities at Netflix had already started developing a device that allowed people to directly download the concerned movies to the television or the other viewing device that was used by the concerned client of the company (Netflix.com. 2018). The concerned authorities at Blockbuster were also made aware of the concerned situation, however, the yesteryear entertainment provider had not been observed to put forth any step in the matter. The concerned entertainment provider was observed to attempt an increase in the sales by introducing the stores at various other locations as well as including the books, toys and the other items that might help to attract clients to the Blockbuster stores thereby increasing the earned revenue.

How Netflix beat Blockbuster

The concept of the online operations of the company has helped Netflix in adding an increased competitive advantage over the yesteryear competitor, Blockbuster. Blockbuster had been known for laying more stress on the rentals on movie DVDs and the reluctance of the company in the expansion over the virtual space. The competitor of the organization, Netflix, on the other hand is observed to have expanded over the internet thereby reaching out to the various clientele of the organization that was based in the various foreign locations and might have expressed their desires to download the concerned movies or directly stream them to the devices that was used as a medium for watching the concerned videos. The retail units might have helped the concerned clients to view the concerned movies or other entertainment media on a rental basis thereby leading to the conditions that require the repetitive rentals whereas the online operations of the concerned competitor of the company might help the concerned clients of the company to download the concerned movie thereby enabling them to view the movie or the concerned entertainment videos at any time or condition that they might prefer. The online operations of Netflix have also helped the concerned clientele of the company to view the concerned entertainment video or movie on-the-go thereby helping in the improvement of the popularity of the products of the company among the clientele (Scmp.com. 2018). The introduction of the original contents in the movies that are distributed by Netflix tend to help the company to gain a competitive advantage over the other companies in the market that has been dealing with the rental services and online streaming of the movies (Bt.com.au. 2018). The online operations of Netflix have helped the company to reduce the costs that it might have incurred in the dealings that involved the brick and mortar stores of the country (Halal 2015). The workforce of the company majorly involves those that serve the company in the few offices and warehouses that are owned by the company. The staff of the company is not entitled to any sick leaves or authorized vacations. They are free to choose their working hours and are only entitled to complete the job at hand. The remunerations received by the concerned employee and the job titles owned by the concerned employee depend on the concerned employee.

The pricing strategies that are followed by Netflix are better and improved than those that were followed by the other provider, Blockbuster. The pricing strategy followed by Blockbuster was outmoded and the services offered by the entertainment provider lacked the luster and grandeur that might have helped in attracting the concerned clientele. The pricing strategy of Blockbuster was hated by the concerned clientele of the company due to the fact that the concerned company would charge the concerned clientele with a late fee of $5 for all the cases which the concerned client had to abide by if they were late in returning the rented DVDs (Blockbuster.com. 2018). The co-founder of Netflix had introduced the schemes that included the monthly subscriptions and did not bother the concerned clientele with the late fees as well as provided them with the scope of renting movies without a limit. This helped in the popularizing of the concerned company among the clientele of the company (Walker et al. 2017). The software used by Netflix is known to be one of the best software that could be used in the field. The website of Netflix is known to be one of the best organized and clear websites that is available in the field. The concerned company does not allow any scope of ambiguity among the various clientele of the concerned company (Voigt, Buliga and Michl 2017). The major attraction of the company is the aim of the concerned management to offer the clientele of the company with the scope of the seamless streaming of the movies and other entertainment videos that are available on the website of the entertainment magnet. The subscribers of the online movie rental service are charged with a one-time amount that might be paid by the concerned client for a month, a quarter, one half of the year or for a whole year. This helps the concerned company to attract the clientele from the other companies that have been charging the clientele in cases where they might have been late in returning the rented movies (Matrix 2014). The company is known to provide suggestions to the concerned clientele on the basis of the ratings that are provided by the concerned clientele of the organization. The concerned company also offers the clients of the company with a reward of a whopping one million dollars on helping in the improvement of the rating system ofc the company.

Changing technology

The innovations that were implemented by Netflix include the introduction of the schemes of a one-time membership that was valid for a certain duration of time. The company had introduced this scheme back in the year 2000 and since then has been maintaining the business model that suggests that the company would be providing unlimited rentals on a free basis to the registered clientele (McGrath 2013). The business model further puts forth the fact that the concerned fact that the entertainment provider would not be charging the concerned clientele with the handling and shipping fees, per-title rentals or the late fees and would not impose the due dates on the rentals that it had let out to the clientele (Oat 2013). The concerned company in discussion had also put forth the measures that dealt with the introduction of the streaming of the video-on-demand over the internet that helped the company to boost the revenues that the company had been earning from the rentals of the DVDs (Abraham 2013). The online streaming of the videos had helped in the rise of the popularity of the entertainment provider there by helping in the overall growth of the company. The company in discussion had attempted to distribute original movies by eminent filmmakers but had closed down the division in order to avoid competition (Grinapol 2013). The company demonstrated a huge growth in the factors that pertain to the growth of the company in terms of the revenue earned and the client base as compared to the other entertainment companies that have been active in the market (Lotz 2014). The company has been known to have made a commendable progress in the recent years by introducing the Netflix originals to the concerned clientele that it serves in the various markets all over the world (Mansy et al., 2014). This had helped the company to gain more clients all over the world due to the various original television series that are streamed by the concerned entertainment magnet.

The concerned entertainment company in discussion, Netflix, had in the year 2011 attempted to bring about a split within the company. The management of the company had decided to put forth a rebranding of the service that pertained to the delivery of the DVDs by mails. The company had decided to name the concerned service Qwikster. The concerned management had put forth the fact that the division of the company would be treated as a separate identity and the users might have to maintain separate accounts in order to access the services and the rentals that were offered by both the concerned online portals (Huffingtonpost.in. 2018). This move was highly criticized by the concerned clientele of the organization. The company is said to have gone through a huge amount of loss due to the poor reception of the rebranding of the services of the company thereby leading to the conditions if the loss of the clients which had impacted the overall revenue generation of the company. The company had to take down the concerned division from its autonomous state and had to incorporate the same as a subdivision of the mainstream business in order to regain the clientele that the concerned company had lost and thereby boost the earning of the revenue of the concerned company.

Retail outlets versus operating online

The company had rebuilt the fame and the reputation that it had lost due to the poor reception of Qwikster among the clientele of the company. The concerned company had attempted to win back the esteemed clientele by introducing the original content among the various entertainment videos that were streamed by the company. The concerned company in discussion, Netflix, is known for the huge amounts of original content series that it has made available to the concerned clientele (Indiviglio 2018). The company is known to invest in the procurement of the entire series as well as extends the funding for the following seasons of the concerned series. This move on the part of the company helps the company to retain both the clientele as well as the suppliers of the company (Jenner 2016). The seamless streaming of the wide variety of entertainment genres has led to the huge popularity of the concerned entertainment magnet thereby leading to the generation of the higher revenues of the concerned company (Li et al. 2013). The company in discussion, Netflix, is said to have been hugely popular with the younger generation due to the facility that it offers of being able to watch the favorite shows at their own pace and ease.

The future of the company might be said to be bright taking into consideration the facts that the company is hugely popular among the youngsters. This might lead to the widening of the scope of expansion of the company in the newer markets by attracting the attention of the residents of the concerned country (Abreu et al. 2017). The company might face a competition from the other companies that offer the clientele with the similar products, Amazon Prime Videos being one of the potential competitors. The concerned companies might face a huge growth in the concerned market in the upcoming days of the future due to the various factors like the convenience that it offers to the concerned clientele in the matters that pertain to the viewing of the entertainment videos over a television set as per the timeslot allocated by the concerned broadcaster (Waterman, Sherman and Ji 2013). The viewers are allowed to have a choice in the matters that pertain to the frequency and the time dedicated to the viewing of the programs. The cost that needs to be borne by the concerned viewer is comparatively cheap than the costs that need to be borne for viewing a certain program over the normal basic cables (Baccarne, Evens and Schuurman 2013). The content provided by the concerned series tend to have more depth and breadth than the shows that are aired through the basic cables. This might help the concerned entertainment channels to have a greater hold over the clientele than the operators who deal in the basic cables.

Conclusion

In lieu of the above discussion it might be pointed out that the American entertainment magnet, Netflix has a greater advantage over the other competitors of the company. The above discussion also points out the fact that the company might have a ruling authority over the other companies providing similar services to the clientele due to the fact that the company in discussion aims to provide the clientele with the entertainment content that they might not be able to avail elsewhere. The company has been known to have made a commendable progress in the recent years by introducing the Netflix originals to the concerned clientele that it serves in the various markets all over the world. The company has gained popularity due to the fact that the company would be providing unlimited rentals on a free basis to the registered clientele thereby leading to the increase in the clientele of the company. Thus, it might safely be concluded that the concerned company in discussion, Netflix displays the potential of a very bright future and a commendable growth in the overall matters of the business.

References

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Abreu, J., Nogueira, J., Becker, V. and Cardoso, B., 2017. Survey of Catch-up TV and other time-shift services: a comprehensive analysis and taxonomy of linear and nonlinear television. Telecommunication Systems, 64(1), pp.57-74.

Baccarne, B., Evens, T. and Schuurman, D., 2013. The television struggle: an assessment of over-the-top television evolutions in a cable dominant market.

Blockbuster.com 2018. Blockbuster Video Stores & On Demand Movies. [online] Blockbuster.com. Available at: https://www.blockbuster.com/ [Accessed 23 May 2018].

Bt.com.au (2018). Five things Netflix can teach us about innovation | BT. [online] Bt.com.au. Available at: https://www.bt.com.au/personal/your-goals/your-wellbeing/your-financial-health/5-things-netflix-can-teach-us-about-innovation.html [Accessed 23 May 2018].

Dodgson, M. 2018. Technological collaboration in industry: strategy, policy and internationalization in innovation (Vol. 11). Routledge.

Grant, R. M. 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

Grinapol, C. 2013. Reed Hastings and Netflix. The Rosen Publishing Group.

Halal, W.E., 2015. Business strategy for the technology revolution: competing at the edge of creative destruction. Journal of the Knowledge Economy, 6(1), pp.31-47.

Huffingtonpost.in (2018). Qwikster Goes Qwikly: A Look Back At A Netflix Mistake. [online] HuffPost India. Available at: https://www.huffingtonpost.in/entry/qwikster-netflix-mistake_n_1003367 [Accessed 23 May 2018].

Indiviglio, D. (2018). 5 Reasons Why Qwikster Is Now Deadster. [online] The Atlantic. Available at: https://www.theatlantic.com/business/archive/2011/10/5-reasons-why-qwikster-is-now-deadster/246465/ [Accessed 23 May 2018].

Jenner, M., 2016. Is this TVIV? On Netflix, TVIII and binge-watching. New media & society, 18(2), pp.257-273.

Li, B., Wang, Z., Liu, J. and Zhu, W., 2013. Two decades of internet video streaming: A retrospective view. ACM transactions on multimedia computing, communications, and applications (TOMM), 9(1s), p.33.

Lotz, A. D. 2014. The television will be revolutionized. NYU Press.

Mansy, A., Ammar, M., Chandrashekar, J. and Sheth, A., 2014, March. Characterizing client behavior of commercial mobile video streaming services. In Proceedings of Workshop on Mobile Video Delivery (p. 8). ACM.

Matrix, S., 2014. The Netflix effect: Teens, binge watching, and on-demand digital media trends. Jeunesse: Young People, Texts, Cultures, 6(1), pp.119-138.

McGrath, R. G. 2013. The end of competitive advantage: How to keep your strategy moving as fast as your business. Harvard Business Review Press.

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Rodriguez, A. 2018. As Netflix turns 20, let’s revisit its biggest blunder. [online] Quartz. Available at: https://qz.com/1245107/as-netflix-turns-20-lets-revisit-its-biggest-blunder/ [Accessed 23 May 2018].

Scmp.com 2018. Netflix’s original content could mean 50 per cent more subscribers. [online] South China Morning Post. Available at: https://www.scmp.com/business/companies/article/2121204/netflixs-original-content-could-boost-international-subscriber [Accessed 23 May 2018].

Voigt, K.I., Buliga, O. and Michl, K., 2017. Entertainment on Demand: The Case of Netflix. In Business Model Pioneers(pp. 127-141). Springer, Cham.

Walker, R., Jeffery, M., So, L., Sriram, S., Nathanson, J., Ferreira, J., Feldmeier, J. and Merkley, G., 2017. Netflix leading with data: The emergence of data-driven video. Kellogg School of Management Cases, pp.1-19.

Waterman, D., Sherman, R. and Ji, S.W., 2013. The economics of online television: Industry development, aggregation, and “TV Everywhere”. Telecommunications Policy, 37(9), pp.725-736.

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