Exam 4: Netflix in Two Acts: the Making of an E-Commerce Giant and the Uncertain Future of Atoms to Bits

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Once Netflix became a public company, the firm was required to disclose its financial position and reveal it was on a profit march.

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Crowdsourcing is:

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How does Cinematch offer Netflix additional operational advantages for the DVD-by-mail business?

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Durable brands are built through customer experience.

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Netflix offered its subscribers a selection of over one hundred thousand DVD-by-mail titles, while other video rental firms can only offer as much as three thousand. This presents a significant _____ for Netflix over its rivals.

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Although sometimes referred to as "rental," Netflix's model is really a substitute good for conventional use-based media rental.

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In exchange for a percentage of the DVD-by-mail subscription revenue for every disk sent out by Netflix, movie studios offer Netflix:

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Netflix, the one-time "dot-com" upstart managed to achieve scale economies despite the fact that it faced two massive rivals: Blockbuster, a name synonymous with home video rental, and Walmart, not just a large firm, Fortune One, the largest firm in the US ranked by revenues. In what ways did Netflix offer size advantages over these rivals?

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Internet retailers serve a larger geographic area with comparably smaller infrastructure and staff. This fact suggests that Internet businesses are more _____.

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The marginal cost of digital goods is typically considered to be _____________

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Within the DVD-by-mail segment, Netflix remained bigger than both Wal-Mart and Blockbuster.

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Netflix enjoys the triple scale advantage of the largest customer base, the largest selection, and the largest network of distribution centers. This can be attributed to:

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When firms enjoy economies of scale they:

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Netflix competitors in streaming are small and mostly unprofitable.

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In the context of the Netflix case, _____ refers to an extremely large selection of content or products.

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Brands are built through _____.

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The business of streaming video is radically different from DVD-by-mail in several key ways, including content costs, content availability, revenue opportunities, rivals and their motivation.

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The long tail is a phenomenon whereby firms can make money by:

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By shifting to a streaming model, Netflix stands to eliminate shipping and handling costs.

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Netflix can send out any DVD it buys because of a Supreme Court ruling known as the _____.

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