UNIVERSITY OF THE PEOPLE

MASTERS IN BUSINESS ADMINISTRATION

BUS 5114 MIS AND TECHNOLOGY

UNIT4 WRITTEN ASSIGNMENT

Abstract

In 1985, Block Booster was founded to rent home movies and video games, it reached its peak in

2004 when it had 9,094 stores, over 84,300 employees and over $6 billion in profits, but in 1997

a new company called Netflix was founded, this company achieved progressive success that

ended the existence of Blockbuster, which filed for bankruptcy in 2010 (Gloria, 2018). In this

article I will discuss the superiority of Netflix over Blockbuster.

Introduction

Netflix began selling and renting DVDs by mailing them to customers without delay, while the

Blockbuster Company rented home movies through its stores and levied relatively high late

fines, at this point DVD users represented no more than 2% of the movie rental audience. ,

(Oomen, 2020). Where videotape was the best. Netflix maintained these strategies until it go to

the top:
Data Dependency:

Netflix does not only depend on the customer's recommendations and direct request, but rather

depends on the data it gets from their behavior with the movies shown, such as how many

minutes they have watched of a movie and how many times they have watched a certain type of

movie. Movies and therefore proactively uses this data to create content that suits personal

preferences (Mohammed, 2018).

Customer convenience:

Since Netflix's inception, it has primarily adopted the concept of customer convenience, first by

delivering movies to the door of the house and then through internet subscription.

On request:

The customer's ability to view content wherever and whenever they want, with low monthly fees

and no exorbitant late fees.

Speed and troubleshooting:

Netflix relies on an innovative system that makes it an excellent platform for viewing movies at

different internet speeds without problems or interruptions.

High Quality Library:

With over 100,000 options, Netflix excels at Hulu. Offers the most popular TV shows as well as

a bigger range of internationally voted films.

Netflix technological innovations:

Throughout its history, Netflix has made several progressive technological innovations that have

led to its current success, notably the following:

Subscription model: The monthly payment method for watching movies was one of the first

innovations of Netflix, and although it did not do very well at first, it is now the focus of the

work of most movie streaming platforms, (MUJOVIĆ, 2018).

- Move to video stream: This feature was pioneered in Netflix and developed a lot until it

changed in quality and worked perfectly.

- Waitlist: Excite the audience with a list of movies that will be available on a certain date.

- Personal recommendation system: Netflix has developed a great algorithm to recognize

the preferences of the viewer even without a choice.

- Exclusive content: Netflix has turned to the production of films and documentaries and

has now become one of the most important production companies.

- Unlimited access: Netflix has partnered with most video display vendors, from Apple and

Android players to Google Chromecast and Roku.

- Generous spending on programming: Since 2014, Netflix has spent more on

programming in this area than HBO, Amazon and Hulu combined. The cost of

programming was estimated at $5 billion in 2016 (Kumar et al, 2015).

 - Multi-viewing: This allows members of the same family and friends to use the same

subscription for up to 4 people who can watch different screens at the same time. So

Netflix is flexible in its services.

- Offline playback feature: Netflix allows users to save content in standard and high

quality. While there are restrictions on the content you can download, Netflix is also

making it better. Thanks to this feature, viewers can save videos and watch them later

even without an internet connection.

- Ease of use: It is one of the most user-friendly streaming services. You only need to log

in to the service once and then run the application (for example, on a smart TV or

smartphone).

Netflix and disruptive innovation:

It is intended for a company to offer a product or service in the market that the main competitors

see as inferior to them in terms of profit and distribution, because this product or service targets a

specific segment of customers who are initially few and do not achieve an adequate value for the

company profit, while large companies concentrate on other customers, this company acquires

more customers until their number doubles many times, eventually becoming the majority

(McAlone, 2015).

Netflix initially focused on DVD customers and in the 1990s there were few, then it focused on

Internet customers, and as people turned to modern technology and the Internet, the number of

videocassette customers in Block Booster decreased until it ceased to exist, Netflix's popularity
increased until it reached its peak (Kylliäinen, 2019). And this was done with the following

properties:

- Lower profit margins initially.

- Higher risks and uncertainties persist.

- Its emergence of a new market sector in the current market but its size is smaller.

- Dramatically change sales pitches and measures of customer value.

- Advanced technology and great new business model accompanying the service.

- It occurs slowly at first until it reaches the mainstream and then grows exponentially.

Conclusion

Netflix's success model is one of the few examples of business success that took so long and cost

so much to become what it is now. The ability of the business leaders at Netflix to develop and

see the future of what the movie viewing market will be has now made it the first company to

monetize the service (Oomen, 2020). Even Netflix has benefited greatly from the Covid-19

pandemic over the past year and to stay at home, to be the most beneficial company out of it, and

this is based on strong information systems management strategies that have enabled it to do so.

References

Mohammed, S. (2018). How Did Netflix Build Its Sustainable Competitive

Advantage? -Business Strategy and the Key Success Factors.

https://shahmm.medium.com/how-did-netflix-build-its-sustainable-competitive-advantage-

3b3c7943c897

MUJOVIĆ, V. (2018). NETFLIX, 10 INNOVATIONS THAT CHANGED THE WORLD

https://www.le-vpn.com/netflix-10-innovations-changed-world/Oomen, M. (2020). Netflix: How

a DVD rental company changed the way wespend our free time.

https://www.businessmodelsinc.com/exponential-business-model/netflix/

Kylliäinen, J. (2019). Disruptive Innovation – What is It and How Does It Work?

https://www.viima.com/blog/disruptive-innovation

Gloria, (2018). The Origin of Netflix’s Succes.

https://digital.hbs.edu/platform-digit/submission/the-origin-of-netflixs-success/

Kumar, N., Sharma, E., Matthews,B., & Baskov, V. (2015). Report prepared for:

Netflix business model analysis.

https://my.uopeople.edu/pluginfile.php/1184109/mod_forum/intro/NetflixBusinessModel.pdf
McAlone, N. (2015). The father of 'disruption' theory explains why Netflix is the

perfect example — and Uber isn't.

https://www.businessinsider.com/the-father-of-disruption-theory-explains-why-netflix-is-the-

perfect-example-and-uber-isnt-2015-11