Wednesday, April 2, 2014

Layered Environments of Strategy: Netflix & Hollywood

Photo Credit: Kim Trolke, “Is Netflix Pushing the Envelope Again?,”

Upon reading Farhad Manjoo’s NY Times article, “Why Movie Streaming Sites So Fail to Satisfy,” strategy’s dependence upon other strategies became wholly transparent. While Netflix operates in the realm of online entertainment, it straddles what is a very classical strategy (as represented by the entertainment industry) but operates mainly in the shaping environment (internet software and services). Netflix began operating as a mail-based DVD rental company (remember those?) but started moving into streaming online. Since their shift of operations to a streaming focused model, they have become one of the most successful leaders in the industry.

Netflix, as having truly changed their environment is still limited by the classical strategy from where their product originates. The movie business is fragmented and based on a release strategy called “windowing.” (1) All of the film studios adhere to a “rigid life cycle” for its movies. Basically, premium TV channels can purchase a movie’s rights exclusively. (2) This is where the fragmentation comes in–these exclusive rights stop entertainment streaming sites like Netflix from showing movies while other services show them.

Although Netflix shaped their environment, there is only so much they can do to as they are limited by movie producing companies. While Netflix is still visionary, the company has posted their long-term goals emphasizing that:

We don’t and can’t compete on breadth of entertainment with Comcast, Sky, Amazon, Apple, Microsoft, Sony, or Google. For us to be hugely successful we have to be a focused passion brand. Starbucks, not 7-Eleven. Southwest, not United. HBO, not Dish.” (3)

This strategy goes on to say, “…instead of trying to have everything, we should strive to have the best in each category. As such, we are actively curating our service rather than carrying as many titles as we can.” (4) This focus on what they CAN do in the environment in which they operate shows the company’s awareness of their capabilities and focuses their vision, providing them the opportunity to continue to thrive and lead in their industry.

1) Farhad Manjoo, “Why Movie Streaming Sites So Fail to Satisfy,” NY Times, 3/26/14, accessed 3/30/14,
2) Ibid.
3) “Netflix Long Term View,” Netflix, 1/22/14, accessed 3/30/14,

4) Ibid.

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