Case Number: 5-110-006, Year Published: 2010
HBS Number: KEL473
Netflix, Blockbuster, Analytics, Strategy, Data, Data Mining, Strategic Advantage, Reed Hastings
By 2009 Netflix had all but trounced its traditional bricks-and-mortar competitors in the video rental industry. Since its founding in the late 1990s, the company had changed the face of the industry and threatened the existence of such entrenched giants as Blockbuster, in large part because of its easy-to-understand subscription model, policy of no late fees, and use of analytics to leverage customer data to provide a superior customer experience and grow its e-commerce media platform. Netflix’s investment in data collection, IT systems, and advanced analytics such as proprietary data mining techniques and algorithms for customer and product matching played a crucial role in both its strategy and success.However, the explosive growth of the digital media market presents a serious challenge for Netflix’s business going forward. How will its analytics, customer data, and customer interaction models play a role in the future of the digital media space? Will it be able to stand up to competition from more seasoned players in the digital market, such as Amazon and Apple? What position must Netflix take in order to successfully compete in this digital arena?
To examine the benefits and risks of investment in analytical technology as a means for mining customer data for business insights. Students will develop a strategy position for Netflix’s investment in technology and its digital media business. They must also consider how new corporate partnerships and changes to the customer channel model will allow the company to prosper in the highly competitive digital space.
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