Disruptive business models are good for the many, but are often detrimental to the few. In other words, when a business like Netflix offers its services at a much cheaper and more convenient level than rival businesses, then its competitors will inevitably suffer, even though vast amounts of consumers benefit. Eventually, unless its competitors can adapt to offer similar services, they will be forced out of business.
As expected, Netflix has shifted away from its postal delivery service in a major way, in recent years. As everything from grocery store journeys to marathon Christmas shopping weekends have moved into the digital realm, so too has movie rentals. Streaming movies is the latest “rage,” so to speak, and Netflix has created a brilliant interface that not only supplies more than 150,000 titles to its users, but also has a complex algorithm system to analyze the things you watch and suggest other shows that might pique your interest. This, combined with its rating system and continuous play function, has seen Netflix grow into a phenomenon of shocking proportions. Users are only required to pay a nominal $ 8/ month fee for unlimited use of the service.
An immediate question that comes to many people’s minds is how Netflix is allowed to offer access to this huge range of TV series and movies in a legal fashion, but the answer is quite simple: it buys the rights to the films and television programs. What is even more impressive in its creative business model though, is its method of choosing what content to offer. Along with the obvious choices of hit shows and classic movies, Netflix also remains on the cutting edge of entertainment by following the trends of internet users. Pirating is often seen as one of the “negative” aspects of the internet. Stolen or pirated content is a multi-billion dollar online black-market.
Netflix has used the power of this negative force against itself, by working with technicians and industry professionals to track what material is most commonly pirated. Based on this accumulated data, Netf- lix makes decisions to purchase the rights to certain shows, making them available through its own service in a legal form. This not only makes Netflix an appealing service that offers what people are already looking for, but it cuts down the inflow to the pirating industry significantly, something that movie executives, television producers, and actors appreciate, in terms of artistic integrity and respect.
All of these aspects of Netflix make it up-to-date and relevant, utilizing some of the most advanced trends and technologies to draw in more and more users every month. By September 2013, Netflix had reached more than 40 million global users; 31 million are located in the United States, alone. There is every indication that these numbers will continue to climb, particularly because the creative minds at Netflix are now tackling a new obstacle to their success. Learn more about disruptive business models only at the University Canada West.