1. Research Question:
Is the emergence of video streaming and Video-On-Demand (VOD) technologies posing a threat to the sustainability of Netflix’s business model?
2. Problem Definition:
Netflix is a household name in the media and entertainment industries, especially considering that it is has an unmatched client base in the movie industry (Kaplan 78). Established in the year 1997, Netflix, Inc is a corporation headquartered in Los Gatos, California. The organization offers DVD-by-Mail services at a flat rate subscription in the United States. It started offering such services in the year 1999 and by 2009; the organization had 10 million American subscribers and was already offering more than 100000 titles on DVD. Today, the corporation is on the verge of losing the giant title it has enjoyed for more than a decade, thanks to the emergence of Video on demand technologies (Kaplan 112). Since the organization began offering the DVD-by-mail services, it adopted a business model that saw the interested individuals pay a flat rate subscription fee. Once successfully subscribed, one could rent movies on DVD, which the organization could deliver by mail. The subscribers could then return the DVDs to the organization via mail as well. Initially, the corporation charged lateness fees if and when a subscriber returned the DVD in a manner that was not timely. Due to such inefficiencies, technology has come up with solutions that will boost efficiency. The video on demand (VOD) or audio and video on demand (AVOD) technologies allow an individual to get the movies and video clips of their choice online (Koch 99). This means that a user can use a set top box, a computer or a digital video recorder to stream and watch the movies in real time, or download them for later viewing. As a matter of fact, this is a better model compared to what Netflix has to offer. It is for this reason that Netflix’s business model is considered to be under threat.
3. Justification:
This research is inevitably important, especially considering that we are living in a technology driven world. The essence of technology is efficiency and convenience. It is evident that newer technologies offer more convenience compared to the existing ones. For instance, the video on demand business model is driven by advanced online technologies. This research is important as it will enlighten various parties on the weaknesses of the business model adopted by Netflix. Additionally, the fact that Netflix is a household name in the media and entertainment industry justifies this research because the success or failure of Netflix affects a significant fraction of the population. As a matter of fact, there is a notable information gap on this matter because the video on demand (VOD) business model is a new development. Secondary research is exceptionally important as it will offer a deeper understanding of the nature of Netflix’s business model. Additionally, secondary research is a pool of knowledge as it borrows from the observations of different authors and experts in this area.
4. Specification of Information Needs:
Successful completion of this research calls for a wide array of information. Primarily, there is need for information regarding the historical perspectives of Netflix’s business model. Secondly, there is need for information on the strengths and weaknesses on the Netflix business model. Thirdly, information is needed on customer awareness and the time that they may need to adjust to the novel models in place. Additionally, there is need for information on the probability of Netflix’s model overhaul, to adopt the new models. While the information needed is considerably wide, I will rely on a number of reputable sources, especially existing research, online databases, e-journals, and Internet search engines
Works Cited
Kaplan, Saul. The Business Model Innovation Factory: How to Stay Relevant When the World Is Changing. Hoboken, New Jersey: Wiley, 2012. Print.
Koch, Christoph. Video on Demand - Television for a New Millenium. München: GRIN Verlag GmbH, 2007. Print
