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Netflix’s New Strategy: Time to Buy?

In: Business and Management

Submitted By msakacsi
Words 1405
Pages 6
Michael Sakacsi (572739)
MG 495 Business Policy
12 Oct 2012
Netflix’s New Strategy: Time To Buy?

Executive Summary: “Netflix is the world’s largest online DVD movie rental service offering more than one million members access to more than 15,000 titles” (History). In addition to the selection, Netflix provides fast, free delivery.
The Company was formed by Reed Hastings and Marc Randolph in 1997. These two men had previous experience in new technologies; Randolph in a computer mail order company called “MicroWarehouse” and Hastings in a company called Pure Software. Randolph also was vice president of Borland International. It was Hastings, using his $700 Million sale of Pure Software that bankrolled the investment. “The DVD format, which can store a high-quality copy of an entire feature film on a single five-inch disc, had been introduced in the spring of the year.” (History). Even with the number of titles limited (less than a thousand at the time), Hastings and Randolph thought the format had the potential to replace video tapes. This was also the same period that the much larger laser disk was coming on the scene. They took the risk that the DVD would out produce other formats and overcome to become the new standard in home video. The company opened on April 14, 1998, with 30 employees and 925 titles for rent. (History) The company initially worked under the business plan of renting and selling DVDs to customers; providing an alternative to the local video store. The case for NetFlix.com (note the upper case F) was that it could provide a customer the exact movie they wanted, at a low cost and without the hassle of going to a store that may not have it in stock. In 1999, sales of the videos were halted. Group Arnault invested $30 Million into the firm. (History) It was at this time that the subscription plan debuted. A…...

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