Netflix Key Success Factors
Autor: shellclytn08 • September 6, 2012 • Case Study • 2,006 Words (9 Pages) • 3,725 Views
Phase 5 Individual Project
Key Success Factors
Introduction
The home movie-rental industry has been around since 1977. George Atkinson opened the first video rental store in Los Angeles, California (A History of Home Video and Video Game Retailing, n.d). Over the next three decades, the industry has bloomed and evolved and transitioned into something new. The first video store rented VHS tapes.
Netflix.com was founded by Reed Hastings and Marc Randolph in 1997. In 1998, Netflix began renting and selling movies and Netflix became the first company to offer DVD rental service online with 900 titles (A History of Home Video and Video Game Retailing, n.d). In 1999 they stopped selling the movies and developed a subscription plan. The company went public in 2002 and changed their name from Netflix.com Inc to Netflix Inc. By 2003 Netflix had 1 million subscribers (Funding Universe, n.d.). In 2011 Netflix had a market share of 61% (NPD Group, 2011). The sales level at the end of December 2011 was $3,204.6 million and the last five years gross profit margin was 55.6% (Netflix Inc, 2012). The financial performances of Netflix are shown in the table below:
Return on Equity (ROE) 34.2%
Sales Growth Rate 46.93%
Inventory Turn 2.2
Return on Assets (ROA) 10.9%
(YCharts, 2012)
Redbox began in 2002, in a McDonald’s. By June of 2005 it had expanded to 800+ McDonald’s and as of 2011 Redbox had 29,000+ locations (The History of Redbox, 2012). Redbox was purchased by Coinstar, Inc in 2009. In 2011 Redbox had a market share of 37%(NPD Group, 2012). The sales level at the end of December 2011 was $391.8 million and the last five years gross profit margin was 31.0%(Coinstar Inc, 2012). The financial performances of Redbox (Coinstar) are shown in the table below:
Return on Equity (ROE) 34.2%
Sales Growth Rate 33.19
Inventory Turn 9.1
Return on Assets (ROA) 8.18%
(YCharts, 2012)
Operational objective
The operational objective of Netflix is to provide an extensive selection of movies and television shows on DVDs or through streaming video with the fastest free delivery service possible. The objective would be to position their facilities in such a way to allow fast delivery of DVDs all the while still being able to provide numerous titles to those who wish to stream as well at one low cost.
The operational objective of Redbox is to become the number one destination for providing low cost DVD and video game rental
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