Netflix, initiated in 1997, began as an online DVD rental service and later evolved into a streaming video on demand subscription service. Netflix granted the privilege of non-commercial customer-centric viewing experience of a broad range of content viewing experience with a minimum monthly fee. With over 50 million members, Netflix offered the content in more than 40 countries.
From DVD postal service provider to the major internet-based video service provider, Netflix has struggled against video rental incumbent Blockbuster, taken the first move in video streaming, built inimitable technical advantage in hardware support and data science, successfully utilized product leadership to achieve network externalities and further customer intimacy, became an incumbent itself and reformed the video content industry business model.
First-mover advantage
Netflix pioneered the subscription streaming service, and grabbed the first mover advantage. Preemption of subscribers helped a lot to reinforce the continuous growth as most subscribers usually obtain only one or two accounts. Brand. Approciable region??. In Netflix’s unique product leadership strategy, customer base from rental age to early streaming launch contributed enormously in Big Data mining, led to continuous success. However, customer switch cost is extremely low in streaming services as the only investment of subscribers are the time for downloading apps and monthly fee which subjected to discontinue.
Even though first-mover advantage is not preeminent in Netflix’s growth, building on that, Netflix managed to leverage their core competency in data science and technical advantage, achieved product leadership and customer intimacy simultaneously, created a mechanism to make both work at the other’s advantage.
Product leadership
Headquarted in Silicon Valley, Netflix foresaw the importance of technical advance in streaming business, they worked closely with developers, high-tech companies to ensure accessibility, stability and excellent database management.
Netflix is accessible by any screen with Internet connection, Xbox 360, Blu-ray players, Play Station 3, Nintendo Wii, PC, Mobile, Tablet and the whole Apple product line.
Excellent server engineering guarantees the stable operation, even during extreme cluster, such as during “House of Cards” launching, almost 30% of the peak Internet traffic went to Netflix.
Netflix also advanced in cloud platform engineering. Building on their overflowing strength, Netflix is reforming technology to upgrade Amazon Web Services cloud infrastructure and other major cloud infrastructure providers.
Netflix is investing over $400M in 2014 on technology development to continue improving user-interface, further broaden the range of platforms they supported, and keep edge in all core technical competencies.
Moving from simply content distribution to creation, Netflix launched an original series “House of Cards,” which became a critical hit both in United States and abroad, driving an estimated 10 million additional subscriptions, yielded over 2 billion views last year in China alone through a local VOA provider.
Netflix stored more than 10 years of customer data and billions of ratings, traced more than 25 million users, tracked and examined 30 million plays per day for any playing action such as pause, rewind, fast-forward, or abandoning, and searching habits. After learning enough preferences and watching habits, cross-examined with 79 thousand content categories, Netflix finalized the recreation of “House of Cards”.
Netflix successfully utilized network externalities and further built on it with the power of algorithms. The exponential growth of subscribers enabled richer data collections, and we can anticipate more accurate prediction and next new hit, which in turn brings in subscriber inflow.
Now known for original and exclusive content, Netflix also actively seeks partnership with top-notch content providers to enrich
