Price-Hike-Train-Wreck - Netflix Assignment Example | Topics and Well Written Essays - 750 words

Price-Hike-Train-Wreck - Netflix - Assignment Example f customers from Netflix provided a huge opportunity to its competitors and the company began running losses, which was worse than expected (Sandoval, 2012). The basic problem, which had led to the meltdown of Netflix, was the pace at which it had been advancing to change its business model. The problem was twofold. If the company had chosen to act too slowly, then it could have lost out on its business to its competitors, who propagated online streaming; and if it continued to advance very fast, then it could have alienated its customers. The pace of the operation and the haphazard way in which it was conducted, led to the major fall. Following are the ways in which the company could have saved its position. Firstly, the company should have played the ball strategically and instead of delivering the bad news of 60% price hike, it should have first released the news about signing of streaming deals with eight new studios, including Paramount, Sony and Miramax and more than 3,500 TV episodes from 15 different network and cable stations, to gain the trust of customers (Adams, 2011). Thirdly, the company could have started its video streaming business, as a subsidiary to its main DVD business, under the same brand and once this genre had gained popularity, it could have phased out the DVD business. The idea that the company was trying to propagate was not incorrect. The popularity of DVD rentals is fast diminishing and demand for online streaming is increasing, despite the fact that quality of the latter is inferior to that of the former. This is because online streaming has no shipping costs and revenues that can be earned from this business is higher than that earned from the business of DVD rentals. The closure of the large DVD rental chains signals the fact that betting on this business will no longer be profitable (Mendelson, 2013). In this regard, the vision of the company was ahead of its times and perhaps to some extent reasonable, but the pace of