Netflix: Designing the Netflix Prize (A) Case Solution & Answer

Netflix: Designing the Netflix Prize (A) Case Solution

Inbound logistics: Netflix is operating in the field of entertainment, and for that, it is dependent on the developers to provide content to its customers. Netflix issues license to its content providers to target the customers in order to provide them the facility of viewing movies on different terms such as limited access or unlimited access to movies. As the business model of Netflix is dependent on the developers, therefore, Netflix is bearing high cost from its content developers to facilitate its customers with high quality and desired content.

Outbound logistics: Netflix also provides online services to its customers through website or apps, which makes it easy for the users to access the contents of Netflix.

Operations: Netflix has been operating as well as the operation management team of Netflix is performing well by offering two systems, which are delivery of content network and cloud architecture. (Muzumdar, January 10, 2014)

Sales and Marketing: Sales and marketing operations are considered as the core operations in the media industry. Netflix spends significant amount on marketing and advertisement, which generates good results in terms of revenue and market share.

Services: Netflix provides a wide range of services to its customers such as from traditional pay per movie scheme to the online subscription. Moreover, the subscribers have easy access to a variety of movies.

Secondary Activities: Secondary activities such as technology, human resource, and infrastructure are also important to support the core operations of the company.

Human Resource: Netflix has a significant amount of workforce, which has tremendous communication skills, and that the employees workt end to work innovatively so as to support the primary operation of Netflix effectively.

Technology: The management of the company is more concerned regarding the technological advancement as providing Cinematch is the evidence of this fact. Moreover, continuous technological advancement is also the key factor for Netflix of being successful.

Procurement: For the distribution of the greater number of entertainment material such as TV serials and movies, Netflix relies on its content providers.Currently, Netflix is dealing on a contractual basis with its content developers in order to assure the continuous supply of the movies and TV Serials (Davcev, 2010)


In order to deal with the current issues, the management of Netflix has following options available.

Hiring additional software developers and improve research operations:

Hiring additional software developers could help the company to deal with this issues however, this option has following pros and cons.

Pros:Hiring additional developers will make the operations more smooth and accurate.

New developers will be fresh and could come up with more innovative and better ideas as compared to the existing developers.

Cons: Hiring and training new developers is an expensive and time-consuming process.

Companies always remain in search to acquire the skilled workforce of their competitor..

Developing Own Crowd sourcing Platform:

The management of Netflix could use existing crowd sourcing platform to come up with a better solution.

Pros: Easy access to a large data set.

More control over the customers’ personal information, which could provide more security to customer intellectual property rights along with providing numerous innovative solutions.

Cons: Expensive source as managing own platform requires a lot of workforce, developers, supervisors and another supporting staff which could also put extra pressure on the current management as managing the workforce is not an easy task.

This option also requires additional finance and the probability of this program being successful is also not clear which has made this option not an effective one.

The price based competition could be ineffective source for the company as it will provide a greater number of solutions to the management, which could be a confusing situation for the company as to which option to choose given the current situation of the company………………….

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