Netflix Business Risks Essay

For a low monthly charge Netflix intromits their customers not only to periodline videos on their mobile devices and computers save besides choose from a wide variety of videodisks. This solelyows for the consumer to look at as much which is beneficial for someone that has a busy scroll and would like to go back and catch up where they left off. As with e truly business on that point are risks associated with the everyday operations and I will go into detail as to what the risks are that Netflix has encountered.Business jeopardizeI was a Netflix customer back in 2010 and I was buoyant with the low monthly rate associated with a Netflix membership. This option was wonderful with a houseful of children that had different likes in what they watched everyone was pleased. As I carefully monitored my monthly beach statements the low expenditure 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 d oubled. I made the honest mistake of not taking into consideration the scotch downturn and what risks were associated with such a good deal. As the saying goes, if it is overly good to be true it must be.With a household of 7 I had to step to the foreweigh the pros and cons of paying an channelitional $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 strong as DVDs in the mail. So why did the the price spring up? Pogue (2011) states, This, as you hindquarters imagine, is not a popular decision. This isnt a court-of-living increase. 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 chain of reaction across the globe, the publication of a 60% price increased caused Netflix to lose 800,000 customers in their ternary quarter. Operational RisksNetflixs Chief Executive Office Reed battle of Hastings made the decision in splitting Netflix into two separate companies. 1 of the companies will be specifically for streaming movies on demand and the otherwise company will be called Qwikster specifically for the DVD business. Blodget (2011) states, And we can also certainly understand 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 heed challenges, and they will be easier to run better if theyre managed separately. Split in Two. It only makes sense to create two companies that would foster them focus on their main objective. Since Qwikster will be for the dvd component part program library they build to take into consideration the costs of shipping out a dvd, the quantity of inventory in the warehouse as well as inventory turn over.Online streaming does not the same costs associated since the consumer is full a click away from watching at their convenience. Consumers are sometimes 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, slice 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 returning the Netflix dvd given there are no additional shipping costs associated with the dvd, but the declivity for Netflix is that there is one less dvd out in the conception and the inventory wont be replenished until I return this movie.fiscal RiskNetflix domestic online streaming has a committed amount of customers while domestic dvd are hit the worst. Netflix membership plans include $8.00 a month for unlimited streaming, for an addition al $8.00 more a month customers can add unlimited DVDs, and if the consumer is interested 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 net income margins have been sliding steadily and substantially for several years. Moreover, Netflix continues to commit on subscriptions to its DVDs-by-mail service to prop up net income. Although management officially altered corporate strategy to place emphasison streaming services kind of than DVD-by-mail services and there are more than twice as many 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 rise to 15%. This is great news for consumers like me who is a Disney f anatic, now I will have a reason to conciliate with Netflix so that I can watch Disney movies with an unlimited amount of time. coatingWhen 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 pregnant than wants in my household. In mid-2012 I had a career change that resulted in a higher income. I now had a little unneeded play money to apply to a want that I once had and since Netflix allowed my children to be satisfied 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 respect to Reed Hastings, the Netflix-Qwikster split bad for customers. Retrieved from http//finance.yahoo.com/blogs/d aily-ticker/respect-reed-hastings-netflix-qwikster-split-bad-customers-160148340.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/