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The Competitive Advantage of Netflix
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Reference: SGSB-SM268-E
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Year: 2017
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Number of pages: 23
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Geographic Setting: California, USA
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Publication Date: Jan 6, 2017
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Source: Stanford Graduate School of Business (USA)
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Type of Document: Case
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Industry Setting: high-tech; entertainment and media
Description
In 1997 Reed Hastings founded Netflix on the heels of a $750 million exit of his first venture—a software company. The premise was simple: Hastings believed that he could leverage the high-performance culture and data-drivenness embodied by tech companies to succeed in the DVD-rental-by mail business. Within a decade Netflix was bringing in more than a $1 billion in revenue a year and revered as one of the most innovative companies in Silicon Valley. This case covers four distinct eras of Netflix, spanning from 1997 to 2015: A.) the Pre-IPO Era, within which Netflix withstood the dot com bubble and settled on a successful DVD-rental-by-mail business model; B.) The DVD Growth era, within which they held an initial public offering and scaled their business to more than 850,000 subscribers; C.) The Introduction of Streaming era, where Netflix introduced their online video-on-demand service and eventually pivoted to offering streaming only subscriptions; and D.) the Content era, within which Netflix began producing their own exclusive television shows and movies to in response to the ever rising costs of content licensing. "
Learning Objective
The goal of this case is to encourage students to think about competitive advantage in the context of a rapid growth technology company and changing consumer preferences.