chapter 4 questions

who are the rivals to the Netflix streaming effort? Do any of these firms have advantages that Netflix lacks? What are these advantages?

Hulu and Amazon are rivals to Netflix streaming services. These services offer different movies and selections which attracts other customers.

could a new competitor match Netflix's recommendation software? If it did, would this create a threat to Netflix? Why or why not?

A competitor can match Netflix's recommendation software, and there already has been with Hulu and Amazon. However, the churn rate for Netflix is low due to people enjoying their experiences on the platform. There are high switching costs. The data asset is more important than the software. It would not necessarily create a threat

how does Netflix build its data asset? In what ways does it leverage this data asset? Why is the data asset stronger under streaming than it was for the DVD-by-mail business?

Netflix builds its data asset through looking at when a user likes or dislikes a movie. this is able to help the company understand what movies do well and more information on what the user will like.This data asset is stronger than the DVD mail in because the feedback is quicker and easier for user on streaming platforms

how has Netflix leveraged crowdsourcing and code contests?

Netflix has used crowdsourcing and code contests in order to raise their operations and Cinematch accuracy by 10%. they do the hard work

what solution has Netflix come up with to address the need to deliver content to customers' televisions?

Netflix provides tools to firms seeking to build Netflix access into their devices

what "class" of software does Netflix use to make movie recommendations? Think about Chapter 2 "Strategy and Technology: Concepts and Frameworks for Achieving Success": Which key competitive resource does this software "create"? What kinds of benefits does this provide to the firm? What benefits does it provide to Netflix's suppliers?

Netflix uses Cinematch. This software allows for the company to use customer's data and experience to personalize and make recommendations for the customer, also known for collaborative filtering. For the firm, this makes customers more likely to stay on the platform because they are handed content they would like to see. For suppliers, this helps them find an audience for their back catalogue of movies and tv show

what is the Netflix churn rate and what are the reasons behind this rate?

The churn rate for Netflix is low, and even fell when competitors tried to copy Netflix. this is due to people having good experiences with the platform

scale advantages are advantages related to size. In what key ways is Netflix "bigger" than the two major competitors who tried to enter the DVD-by-mail market?

They are bigger in terms of what they offer, as seen through the long tail strategy that they have adopted. they are also stronger because they have distribution centers across the country with overnight shipping

how is scale important to Netflix streaming business?

a larger firm with more customers can spend more on content licenses

what challenges does Netflix face as it expands internationally? What advantages does international expansion offer?

as it expands internationally, Netflix faces the challenges of having to

by going public, Netflix encountered competition from the large, established firms Wal-Mart and Blockbuster. What aspect of Netflix going public lured these firms in to the market?

by going public, Netflix was required to disclose its financial position

what is disintermediation, and what incentives do studios have to try to disintermediate Netflix?

disintermediation is when an organization removes itself from a firm's distribution center. there is incentive by studios because they can interact directly with customers and acquire data, and they do not need to share revenue with a third party

firms with high churn rates are more profitable? (T/F)

false

how does Netflix rank in terms of customer satisfaction today? What factors do you suppose are behind this ranking?

in regards to customer satisfaction, Netflix rates relatively high, with a 90% satisfaction rate. this is most likely a result from their Cinematch collaborative filtering as well as their large variety through the long tail concept

which of the following represents an advantage enjoyed by the Netflix DVD-by-mail business over traditional video stores?

larger entertainment selection

what were Netflix's sources of competitive advantage in the DVD-by-mail business?

long tail strategy, large distribution network, collaborative filtering

why is streaming potentially better for consumers and for content producers? Why is Netflix a potentially attractive partner for content creators (producers, writers, directors)?

streaming is potentially better for consumers and for content producers because producers do not need to pay theaters to show their movies. The consumer also has easy access and can watch it from wherever. content availability and content acquisition is just easier under this process.

contrast Netflix's two businesses: DVD-by-mail and streaming. How do costs differ? How are these costs likely to change over time? How is subscriber interest in these services likely to change over time? What factors influence the reliability of each service? What threats are each of these businesses likely to face?

the costs are different because it is more expensive to operate physical stores and inventories

what is the long tail? How "long" is the Netflix tail in the DVD-by-mail business compared to traditional video stores?

the long tail concept refers to a company offering a large selection of products or service even if there is a small demand for them. these product, because there is a low demand, means it is less likely to be offered at other stores. This is is pretty large for Netflix, as they offer over 120,000 more than a traditional store.

why can't Netflix secure a long tail of streaming content that is the same size as its content catalog in the DVD-by-mail business? What is Netflix doing to make its streaming catalog more appealing than rival offerings?

they are unable to do this due to the copyrights of streaming services and needing access to shows and movies by their studios. because many studios are disintermediating, Netflix is creating original shows

Physical retailers are limited by shelf space and geography(meaning the density of customers around a particular location) (T/F)

true

The shift from atoms to bits is realigning nearly every media industry (T/F)

true

original content is an investment in allowing a firm to provide differentiated goods, away to entice and retain customers with exclusive programming not available anywhere else (T/F)

true

the business of streaming video is radically different from DVD-by-mail in several keyways, including content costs, content availability, revenue opportunities, rivals and their motivation (T/F)

true

the yearly cost to run a Netflix-comparable nationwide delivery infrastructure is about $300million (T/F)

true

does Netflix have a strong brand? Offer evidence demonstrating why the firm's brand is or isn't strong. How is a strong brand built?

yes, Netflix has a strong brand as seen through their high ratings when it comes to customer experience. A strong brand is built through the customer's experience. evidence of Netflix being strong is their 70% recommendation by customers to adopt the service

The marginal cost of digital goods for content owners is typically considered to be_______?

zero