Netflix’s Timing of Entry
Netflix was founded in 2007. The company was created by Reed Hastings. Netflix was a DVD rental delivery company. Netflix utilized the USPS to deliver videos to customers. When created it was the first company of its kind that provided that kind of service.
The timing into this industry was perfect. One major advantage was the only other major competitors at the time of creation was blockbuster. Blockbuster and Netflix were both in the business of offering DVD rentals. Where the two separated was the delivery of that service. Netflix allowed customers to receive the DVDs rentals via USPS whereas Blockbuster had stores where customers would come and pick up the DVD rentals. This allowed Netflix to master their brand…
The first example was the undeveloped supply and distribution channels. Since they were the only DVD rental company that offered a delivery service they had to keep redeveloping their delivery technique to ensure it was profitable. The other disadvantage was the uncertainty of customer requirements. Since Netflix was the first to offer delivery service “market research may be of little help” (Schilling, 2013, p. 93). Netflix had to keep adjusting their fees based on customer feedback. This allowed Netflix to adjust their prices to attract more customers and keep existing customers happy.
Blockbuster tried to make changes to win back the customers it was losing to Netflix and Redbox. The included the option of delivery service to be combined with in store pickups as well. The advantage was that they had a company that already has a DVD rental delivery service to learn from. Netflix had already invested money into research and development of their delivery service and all Blockbuster had to do was copy their service. Another advantage is that Blockbuster knew that there was a need for the service based on Netflix’s…
