Netflix Changes the Market

Netflix Changes the Market

Since the advent of the video tape and movie rentals, a video store on the corner of most neighborhoods has become a staple. Recently however that trend has begun to shift. Netflix led the way in the transition by offering consumers an alternative to going to the store to get a movie. Instead, the company built its business on delivering movies on DVD and Blue-ray formats to consumers’ homes.

The spread of high speed internet into homes has allowed them to grow their business to include on-demand delivery via the internet. Movie rental giant, Blockbuster, responded to the arrival of Netflix by offering a similar option to its customers. As a result, Blockbuster has begun to close many of its local stores in an effort to remain competitive.

For Nexflix, business is booming. During the fourth quarter, the company added an additional 3.1 million customers bringing their user base to about 20 million in total. While the number of subscribers has grown by over sixty percent since the year before, earnings are also up. Revenue increased by 34 percent to close 2010 at $596 million.