Sunday, June 12, 2016

Blue Strategy: Netflix

When I think of the blue ocean strategy, I immediately think about Netflix. Netflix has been driving digital content since 1997. Before Netflix, consumers would have to drive to a Block Buster or Family Video to rent movies and video games. If you missed a television series, you would have to wait until it came out “on video” to buy or rent the season. On demand and DVR did not exist at this point. In 1998, Netflix changed the industry of movie rentals, customers could register online to rent unlimited movies one at a time at a low price and return them for a nominal fee of $7.99/month (now it is $8.99/month, I am an avid customer).  After Netflix other similar competitors appeared including, the TiVo or DVR in 1999, Redbox in 2002 and Hulu was introduced in 2008. In 2007, Netflix released their live streaming option where customers could stream television shows and movies. Netflix continues to evolve and expand with original series and partnerships such as Disney. It is now available worldwide. 

Now that watching television and movies has evolved into the digital mainstream, the need to physically rent a VHS or DVD has practically diminished. Netflix succeeded in differentiation and low cost strategy within a market that already existed. Unfortunately, the big box movie rental stores like Block Buster failed to embrace an online digital strategy and have been dominated by those that have. The digital era is a fast-paced industry and Block Buster failed to keep up. By the time they offered services similar to RedBox or Netflix, it had been too late. Too many other competitors had entered into the market.

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