To do this case study, you need to go to the Harvard Publishing website; link on course content page.
Your assignment and background:
Netflix is a streaming platform firm that has grown tremendously since its IPO in 2002. The case focuses on the importance of customer data as a source of sustainable competitive advantage for a subscription based firm such as Netflix.
Founded in 1997, Netflix began as a video rental firm that mailed movies to peoples homes. Netflix also pioneered a subscription model where customers could choose how many films to have delivered at a time and keep them as long as they wanted by paying a monthly fee. This successful model allowed Netflix to grow at the expense of Blockbuster. Improvement in internet download speeds and streaming technology also propelled the companys growth.
The case presents the latest challenge posed to Netflix when, in 2017, Disney announced that it would remove all Marvel content from Netflix and start its own streaming service called Disney+. Disney is the latest in a series of firms, such as HBO, that have started their own streaming services to compete with Netflix. The case provides students with a context in which to discuss competition among platforms and their sources of competitive advantage. It also provides an opportunity to discuss customer data as a barrier to entry in digital businesses. The competition between Netflix and Disney highlights the different routes the two companies have taken to obtain deep customer insights, with implications for their survival in the streaming industry.
Please label the questions, such as Q1 (you do not need to write them out again). Not all answers are going to be the same length of answer. Do not write out a long summary if it can be brief. Likewise, spend time writing on answers that need significant or detailed explanation.
Key points to understand as you read this case study. (These items are not necessarily discussed within the scope of our class):
While reading and analyzing the case, understand the following (there is nothing to write from these, but this will guide your understanding of this case:
To discuss the business model of platforms, and the ingredients of their success.
To introduce the roles of customer retention and CLV in subscription business models.
To understand the value of customer data and the power of using algorithms to obtain insights from customer data.
To learn about SCA and the different sources of competitive advantage for firms.
To understand how data and algorithms provide SCA for firms.
To apply network effects and SCA to predict competitive dynamics between platforms.
Questions to answer
1. Currently, what streaming services do you regularly watch (Do not include live TV options such as YouTubeTV, Xfinity, etc. You should include Hulu (but not Hulu with Live Sports)? Which of these do you pay for, which ones does a family member pay for, and which ones do you have access through a friend? Do you bundle any of these with other services?
2. Based on your personal preferences, of the non-free services, which single service would you maintain for the next 12-months if it was the only service you had access to and you were paying for it (so consider quality and value).
3. What are the keys to the success of Netflix? What customer metrics are important for Netflix?
4. Why did Disney launching Disney+?
5. How can Netflix compete with Disney+ and what are the sources of its competitive advantage?
6. How can Netflix improve its value proposition over the customers lifecycle? What are the network effects in the Netflix business model?
7. Can both Netflix and Disney+ survive in the streaming industry, or is there room for only one dominant player?
8. What poses a greater risk to the profitability of companies like Netflix – competition within the industry, video game and other entertainment options, studios and other content creators, future new streaming services, or customer buying power? Why? (You should recognize that these are options of the 5 Forces Model by Porter).
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