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

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?

___________ refers to the rate at which customers leave a product or service

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.

_____ 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).

Netflix's decision to unbundle the single fee for its $10 base service into two separate $8 plans for DVD-by-mail and streaming over the Internet proved to be a welcome surprise to most customers.

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

The shift from atoms to bits does not stand to impact content creators, middlemen, and retailers.

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

How does Netflix use collaborative filtering software to match movie titles with customer tastes? In what ways does this software help Netflix garner sustainable competitive advantage?

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?

Why is the “First-Sale Doctrine,” including understanding when it does and doesn’t apply, relevant to Netflix?

How does Netflix leverage its data asset, even as it has shifted from atoms to bits?

If fast-lane access or bandwidth caps become commonplace, Netflix could suffer.

_____ is a classification of software that monitors trends among customers and uses this data to personalize an individual customer's experience.

Why are streaming services considered more appealing to creative content creators than traditional TV?

Original content is an investment in allowing a firm to provide differentiated goods, a way to entice and retain customers with exclusive programming not available anywhere else.

_____ refers to removing an organization from a firm's distribution channel.

Firms with high churn rates are likely to be more profitable.

An internal team at Netflix developed a prototype set top box to enable the direct streaming of content to customers' television sets. However, the idea of offering it to Netflix customers was dropped because:

In addition to serving as CEO of Netflix, Reed Hastings has also served as _______________ for two other leading tech companies, Facebook and Microsoft.