Since the publishing of this case, Netflix has entered the video on demand (VOD) market. What is your analysis of how Netflix has attempted to update their business model with VOD?
Due to the emergence of Video on Demand, Netflix has made its best efforts to be proactive and be ready for the possible mass adoption of VOD technology. The CEO of Netflix stated their willingness to embrace this new technology by saying that they are on the business of “allowing for the best home video viewing for the customers” and not just provide DVD rentals. This statement reflects the dynamism and flexibility of this company.
As of today, Netflix has integrated VOD in its business model and is attempting to establish itself as the market leader in VOD, by integrating a free value added feature to its offering, streaming online video. Netflix is offering unlimited video streaming of over 12000 selections with a subscription of $8.99 or $13.99 per month. This video could be downloaded to a computer or TV through an Internet connected device such as XBOX360, Netflix player, and so on. This added feature is allowing Netflix to increase market penetration of the VOD market and increase customer retention, which has been one of the big challenges for Netflix. As stated before, this move reflects the dynamic capabilities of this firm and a good attempt to address this new technology as a growth opportunity in its path to continue its success.