Netflix Business Risks Essay

For a low monthly toll Netflix allows their customers not only to streamline videos on their mobile devices and computers but likewise choose from a wide variety of DVDs. This allows for the consumer to watch as much which is beneficial for person that has a busy schedule and would like to go back and catch up where they left off. As with every business there be risks associated with the everyday operations and I leave behind go into dot as to what the risks are that Netflix has encountered.Business RiskI was a Netflix customer back in 2010 and I was pleased with the low monthly rate associated with a Netflix membership. This option was wonderful with a houseful of children that had diametric likes in what they watched everyone was pleased. As I carefully monitored my monthly bank statements the low footing was at a constant rate up until the middle of July 2011. My monthly fee of $8.50 went up to $16.00 which nearly doubled. More than doubled. I make the honest mistake of n ot taking into consideration the frugal downturn and what risks were associated with such a veracious push-down storage. As the saying goes, if it is too good to be true it must be.With a household of 7 I had to knocked out(p)weigh the pros and cons of paying an additional $8.00 a month. While comparing the previous membership price along with the new membership price there was no return on the companys part. I was still able to view movies via streaming online as well as DVDs in the mail. So why did the the price jump? Pogue (2011) states, This, as you can imagine, is not a familiar decision. This isnt a cost-of-living gain. This isnt inflation. Its a 60 percent overnight price increase that gives you nothing new in return. Not only was I the only irate customer. Netflix felt this range of reaction across the globe, the consequence of a 60% price increased caused Netflix to lose 800,000 customers in their triad quarter.Operational RisksNetflixs Chief Executive Office Reed Hastings made the decision in splitting Netflix into two separate companies. One of the companies will be specifically for streaming movies on pauperization and the other company will be called Qwikster specifically for the DVD business. Blodget (2011) states, And we can also certainly empathize why, from the companys perspective, it makes sense to split the DVD and streaming businesses into two separate companies Theyre different businesses, with different cost structures and different delivery, marketing, licensing, and management challenges, and they will be easier to run better if theyre managed separately. hitch in Two. It only makes sense to create two companies that would help them focus on their main objective. Since Qwikster will be for the dvd section library they have to take into consideration the costs of shipping out a dvd, the quantity of inventory in the warehouse as well as inventory turnover.Online streaming does not the same costs associated since the consumer is just a click away from watching at their convenience. Consumers are fewtimes forced in choosing the DVDs because as I have experienced myself some of the older and newer versions of movies are not available to stream online. For example, Willow was an all-time favorite of mine during my childhood, time checking the streaming library I came across the movie but once I had clicked on the title it showed it was only available via DVD. I have a very bad habit in go the Netflix dvd given there are no additional shipping costs associated with the dvd, but the twilight for Netflix is that there is one less dvd out in the world and the inventory wont be replenished until I return this movie.Financial RiskNetflix domestic online streaming has a committed meter of customers while domestic dvd are hit the worst. Netflix membership plans include $8.00 a month for eternal streaming, for an additional $8.00 more a month customers can add unlimited DVDs, and if the consumer is intereste d in Blu-ray disks then they would add an additional $2.00 on top of dvd price bringing it up to $10.00 for Blu-rays. Hurley (2012) states, Nevertheless, gross, operating, and send away income margins have been sliding steadily and substantially for several years. Moreover, Netflix continues to rely on subscriptions to its DVDs-by-mail service to holding up net income. Although management officially altered corporate strategy to place emphasison streaming services or else than DVD-by-mail services and there are more than twice as umpteen streaming subscriptions as by-mail subscriptions.Strong Force. In December 2012 it was announced that both Disney (DIS) and Netflix (NFLX) announced a deal that would allow Disney shows and movies to be available to only Netflixs subscribers. The result of this announcement resulted in Netflix stock bob up to 15%. This is great news for consumers like me who is a Disney fanatic, now I will have a reason to stay with Netflix so that I can watch Disney movies with an unlimited amount of time.ConclusionWhen the price increase occurred back in 2011, I did cancel my membership because I was still feeling the economic downturn in my household. I would rather use that $18.00 towards filling up my gas tank rather than watch TV, in my eyes needs are more important than wants in my household. In mid-2012 I had a career change that resulted in a higher income. I now had a subatomic extra play money to apply to a want that I once had and since Netflix allowed my children to be well-to-do and allowed for some quiet time on my end, I went ahead and renewed my subscription. Being on Netflix for a few months I can say that I was extremely stoked when the announcement of Disney and Netflix working together.ReferencesBlodget, H. (2011). With all admiration to Reed Hastings, the Netflix-Qwikster split bad for customers. Retrieved from http//finance.yahoo.com/blogs/daily-ticker/respect-reed-hastings-netflix-qwikster-split-bad-customers-16 0148340.html Hurley, D. (2012). Could Netflix bounce in 2013? Retrieved fromhttp//www.wealthlift.com/blog/netflix-bounce-2013/Pogue, D. (2011). Why Netflix raised its prices. Retrieved fromhttp//pogue.blogs.nytimes.com/2011/07/14/why-netflix-raised-its-prices/