The Homa Files

TakeAway: One of the keys to a company’s long-term success is developing new products or services that create value for high potential markets

Rather than remain content with its status as the leader in DVD rentals, a strategy that did not work well for Blockbuster, Netflix is constantly developing new ways to deliver its services and expand its offerings. 

As technology improves and consumer preference shifts toward online streaming, Netflix has been able to thrive and add new subscribers by forging relationships with companies like Apple and Epix that respectively provide hardware to deliver Netflix’s content and license content to Netflix.

This latest deal with Apple will help ensure that Netflix continues to deliver increased value to its customers even as the DVD rental market continues to decline.

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Excerpted from WSJ, “Netflix Adds Polish With Apple,” by Nick Wingfield, September 2, 2010

Apple Inc.’s decision to include a streaming video service from Netflix Inc. is another sign the DVD rental company may be able to weather a shift to Internet video that is challenging other companies across the entertainment landscape.

Apple … said a new, cheaper version of its Apple TV set-top box … will feature the streaming Netflix service … [T]he relationship could further establish Netflix as a mainstay in electronics devices that deliver Web content to the living room.

Netflix … for several years has been cutting deals with game console makers, television manufacturers and Blu-ray disc makers to include software in their products that provide access to the Netflix streaming service. It has similar apps that run on iPhones and iPads. In total … more than 100 different electronics devices can now access the Netflix streaming service. …

The company says the convenience of its Internet service has helped Netflix expand overall subscriptions. They jumped 42% to 15 million members in the second quarter from 10.6 million a year ago. The company says 61% of Netflix members watched at least 15 minutes of its streaming video during that period, up from 37% the prior year. …

Netflix has defied predictions of its demise again and again over its 13-year history. It has weathered challenges in its DVD rental business from much bigger companies including Wal-Mart Stores Inc., Amazon.com Inc. and Blockbuster Inc. Both Wal-Mart and Amazon ended up getting out of the DVD rental-by-mail business. Blockbuster, meanwhile, has struggled to transform itself, warning investors that it could file for Chapter 11 bankruptcy protection. …

Edit by DMG

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Full Article
http://online.wsj.com/article/SB10001424052748704791004575466051763313276.html

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This entry was posted on September 16, 2010 at 6:33 am and is filed under Mktg - Product Line Mgnt. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.