Netflix - In Pursuit of VOD

Netflix was at a cross-roads during early 2007 which could severely impact the future direction of the company. The options presented in the case were as follows:

1 - Licensing agreement with cable providers to use the proprietary recommendation system

2 - Integrate streaming online video feature into the core offering

3 - Build a stand-alone online video business

My recommendation would be to pursue option 2 with an extension of the original idea. I would recommend that Netflix partners with a full-service media company such as Verizon to stream its video content through the multitude of Verizon's pipes. I would not look solely at online streaming. The future is going more and more mobile, so I think an integrated strategy that allows a user to log-in via mobile phone, tv, or internet is vital to this option. Users like to have choices and are more connected than ever before so it only makes sense to accommodate all of these options.

I think Netflix could offer some sort of tiered pricing structure such that users can take advantage of this opportunity and so Netflix can gain some additional revenue as well. I think a consumer that pays $10/month for "hard copies" of the DVDs would be more than willing to pay a couple more dollars a month to obtain the instant gratification of having the ability to order a movie and watch it, whenever they wanted.

All of this being said, whichever option Netflix chooses, the company needs to still place a significant focus on the movie selection for the inventory, that is key to their entire strategy. I am not a Netflix subscriber, but the one gripe I hear over and over is that the movie selection needs improvement.