The convenience and accessibility of Netflix has contributed to its success and capital gain. In April 2011, Netflix had attained 23.6 million subscribers in the United States with more than 26 million worldwide. Netflix reached $1.5 billion in total digital revenue by 2011. Netflix has revolutionized the traditional experience of renting movies. And with this revolution, Netflix has met popularity and demand, achieving a booming profit.
Netflix charges a monthly flat rate. Subscribers are able to form a list of the movies that they would like to order, putting their list on a queue online. Subscribers are allowed to keep the movies as long as they want; there are no late fees. Instead, there is a limit that places a maximum number of movies that can be loaned out to a subscriber at one time. Subscribers can increase this maximum through attaining different levels of subscription, the highest level allowing for eight movies to be loaned at one time. When a subscriber is done with their movie and ready to receive another listed on their queue, the disc is mailed back to Netflix in a prepaid envelope.
Netflix has fought to stay on top of the online rental pyramid. Blockbuster, one of Netflix’s top competitors, began an online rental service. Marking their prices at $19.95 in August 2004, Blockbuster sparked a price war with Netflix in an effort to attract more customers. In response to Blockbuster’s price, Netflix lowered its monthly rate to $17.99. Blockbuster lowered their prices to $14.99. However, this low price rose when the two companies settled for prices nearly identical to each other. Blockbuster, in a further effort to compete with Netflix, offered its customers the option to swap rentals with videos in local stores. However, Blockbuster has not been able to successfully overturn Netflix’s success.
Netflix, in order to reach out to a larger customer base, now offers other features that span beyond the scope of movie rental. Users are now able to rent television shows as well. Netflix also allows their users to watch some television shows on their computer. Instead of renting a disc of a television show, users can now access the shows on their computer, streaming them instantly.
Overall, Netflix has created a widely successful business. Convenient and accessible, Netflix has gained approval, and with it, the demand of consumers.
Does the positive mentality that consumers have concerning policies such as “no late fees” manipulate consumers into paying higher rates?
Works Cited
“Felix Salmon.” Reuters. 31 Mar. 2010. Web. 05 May 2012. .
“Netflix.” Wikipedia. Wikimedia Foundation, 05 May 2012. Web. 05 May 2012. .
posted by Muntz for Lussier.
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