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

________________ refers to a ruling which states that a firm can distribute physical copies of legally acquired copyright-protected products. This enables services such as libraries and video rental, but this right does not apply to streaming digital copies.

How is Comcast vertically integrated?

Describe Netflix's streaming video business model.

Collaborative filtering is a classification of software that:

Netflix has used the long tail in the DVD-by-mail business to its advantage, crafting a business model that creates close ties with film studios. What do film studios stand to gain from taking advantage of the Netflix model targeted at increasing the firm's long-tail offerings?

Explain the long tail phenomenon at Netflix.

_____ refers to a limit, imposed by the Internet Service Provider (e.g. cable or telephone company) on the total amount of traffic that a given subscriber can consume (usually per each billing period).

Fixed costs vary according to production volume.

Choose the correct -Why is the "First-Sale Doctrine," including understanding when it does and doesn't apply, relevant to Netflix?

Although Netflix had a larger distribution network than rivals, other firms could build a similarly large warehouse network. Why was the size of the Netflix DVD-by-mail customer base critical to repelling rivals?

What solution has Netflix come up with to address the need to deliver content to customers' televisions?

Netflix uses data to create tailored audience promotions.

Even though Netflix is now mainly focused on digital distribution, it continues to offer the DVD-by-mail service in its base-price product.

A low _____ is usually key to a firm's profitability because acquiring a customer is more expensive than keeping one.

The Netflix customer experience was always weaker than the in-store experience of DVD rental firms, which had human staff. However, consumers were willing to overlook their dissatisfaction given Netflix's other benefits.

Netflix's initial revenue model was based on a flat-rate monthly subscription fee rather than a per-disc rental fee.

At Netflix, the marginal cost for digital goods is zero for all licensees.

User ratings act as _____ for Netflix's customers.

Cinematch develops a map of user ratings and steers users toward titles preferred by people with tastes that are most like theirs.

Provide a brief description of the basics of the Netflix DVD-by-mail business model.