Since the publishing of this case, Netflix has entered the video on demand (VOD) market. What is your analysis of how Netflix has attempted to update their business model with VOD?
I think that VOD is the direction that Netflix has always had in mind. In that respect, they have set themselves up very well to compete effectively with the stand alone VOD providers.
As the issues of content and connectivity are resolved, Netflix will be in an excellent position to capitalize on its current customers and its ratings and recommendations system to seize a majority share of the VOD market.
However, there are technological barriers that will prevent the VOD market from surpassing (or coming close) to the DVD by mail market. Also, I imagine that due to the cost of licensing and possible bandwidth issues, it will take a significant amount of time for VOD to become an independently viable arm of the Netflix company.
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