The Role of Information Technology in Netflix Company Research Paper Sample

A Brief History of Netflix

The founder of Netflix, Reed Hastings, established the company with a perception of providing families with movie services that would do an outstanding job entertaining clients, unlike the old market rental model. However, as it faced certain challenges and suffered several bigger alterations in strategies, cultivating a business model and operational plans that were very disruptive in terms of market video rental series. Being a blend of a large public stock, a recommendation system that increased customer base across a vast register and a large customer following made Netflix a powerful company to contend, particularly as a distribution medium for low profile and self- reliant movie shows. The current paper investigates the brief history of Netflix and the role of information technology in the given company. The paper also deals with Netflix’ competitors and how Netflix has gained a competitive advantage within the market.

Introduction

Netflix is one of the top subscription service providers for online movies and TV shows. It has attracted many customers amounting to millions streaming out high definition quality video. Its plan and traffic operation resolutions have a significant effect on network infrastructure. Planning of such a large scale and high-speed video streaming platform with excellent accessibility and scalability is technically difficult. Despite the challenges, Netflix continues to work on its technology to make their customer’s experience better day by day. The current paper investigates how Netflix’s technology works and how it has made the company so successful among its users.

Reed Hastings and Marc Rudolf, two software engineers, established Netflix in 1997 to lease movies on DVD via the internet, which at that time was a new invention. A shadowy unproved story claims that Hastings had the idea after the blockbuster charged him a $40 late fee for ‘Apollo 13.’ In 1999 Netflix decided to choose a due monthly model of unlimited rentals for a single monthly rate.

In 2006, the company released the $1 million ‘Netflix prize,’ cheering people to come up with a more excelling algorithm than its present recommendation scheme, which was gummed up by divisive movies such as ‘Napoleon Dynamite.’ Three years later, the prize was given to a team of seven men although Netflix had never used their idea.

In 2007, Netflix started streaming with subscriptions accumulating by giant strides. In three years, the service had topped 20 million subscribers. The company drums the move into programming with the ‘House of Cards’, a series about Washington plan composed by David Fincher and Kevin Spacey. Its debut was released in 2013. In an attempt to separate its DVD and streaming business, Netflix discovered Qwikster for DVD distribution in 2011. Within a month, buyers’ protests made the company drop the concept. ‘House of Cards’ was not the first show to premiere on Netflix but ‘Lilyhammer’ which premiered Feb 6, 2012, with all eight episodes accessible right away by a distribution deal the organization concludes for many of its series.

When ‘House of Cards’ earned eight Grammy nominations, Netflix’s visibility increased. The enemy nods were the first to appear in an online-only web show. Its second season premiered Feb 14th, 2014 and earned 13 Emmy nominations. In 2013, Netflix had approximately global subscribers of about 40.4 million (streaming). In 2014, the company was nominated for an academy award for an Original production of The Square. The company’s competitive strategies are exquisite. Its stock price is also well over $400 a share, having increased tenfold since 2007. (Netflix Media Center, n.d.)

Information Technology used by Netflix

Netflix uses a range of individual files to keep their business databases. These files contain entries and fields with the data about their products, suppliers, employees and customers. The client list includes customers’ information; name, address, phone number, and billing information. There is confidential employee information as well as catalogues meant for client and product databases. The feature of the database software is Oracle. The individual that is in charge for the database is the database administrator and the database architect who assists in establishing and designing it. The kind of details that the officials will receive in this organization will be the information about the new clients added, new movie releases and company sales in particular markets.

OLAP is used to maneuver the news the company already has to support decision making allowing analysts, managers, and executives to gain knowledge about data through rapid and reliable public key to a wide variation of possible views on information. Netflix may use OLAP to look out for future trends, marketing, budgeting for business reporting for sales, analyzing which areas are answerable for their increment in sales, and what particular brand or service provided most for the increase in sales. It is evident that Netflix tries to keep their information hidden but it can represent data gathered from many different operational databases to form business intelligence in order to back business analysis activities and use data for critical decision making. In the current data-driven plan, the business intelligence group is responsible for getting up to date, exact, and applicable data about those involved in making decisions. This data guides the company’s plan, direction, and earnings. Ultimate data warehouses are multi-dimensional bodies signified by tiers and rows. They include layers of columns and rows containing such product information as product line and scope, year, consumer segment and the set up of promotion.

Data mining tools are software tools used for demanding information from the data warehouse. Query and reporting tools help the company to create simple queries and reports. Multi-dimensional analysis tools permit members to view information from a different viewpoint. Analytical tools support associates of the company to execute disparate mathematical models to the knowledge stored in a data warehouse to unearth new information. This category of data mining will help them to manage their advertising funds, for instance. Data marts are subsets of a data distribution center which target the parts of the data warehouses. The data stores contain such fields as trading, advertising, deliveries, sales, marketing, services, and account receivables.
Data marts help to use questions and reporting tools, intelligent agents, multidimensional analysis, and arithmetical tools. The individual responsible for the database is the Data Base Administrator. The DBA’s function is based on the technical and visible operational features of managing the data containing organizational information like databases, data warehouses, and data marts. It also includes specifying and arranging database structures and contents, developing security procedures, and supporting and monitoring the growth of database and its applications. The type of software used by Netflix is Windows 7.

Netflix also provides a variety of software to stream movies straight into your home, for example, Roku digital video player, which brings high-quality movies and TV episodes straight to one’s television instantly. They also offer the Xbox 360m, which is the only console that allows users to instantly watch movies, and TV episodes streamed from Netflix on the TV. Another software option provided to their clients is internet linked blue ray players, internet attached HD televisions and digital video recorders. In addition, Netflix uses management software which assists with managing the movies they have, payroll software and collaborative software. Netflix hardware types entail inputting and outputting gadgets, storage devices, and telecommunication devices. Netflix currently uses Windows 7 Silverlight as its software, not Windows 7. The company’s Wide Area Network links multiple LANS over vast geographical areas the size of a country or more. Their Global Area Network serves as an extensive network with a global coverage. It is made possible by a combination of different technologies such as satellite communication. The company also uses an Application Programming Interface. API is an interface that a software program employs so as to allow other software to interact with it.

At Netflix, media types were also created by the Internet Engineering Task Force to ensure efficient and consistent functioning of the internet. The wireless communication allows Netflix to conduct business anywhere. The company also uses more than one Powerful Router as their connecting devices which enable several computers to communicate amongst each other and connect to the internet at the same time. The broadband connection also helps the company connect to the web. Netflix employs IP which is a protocol used for relaying data in a packet switched Internet network. Its domain name is www.netflix.com (Netflix, 2016).

Netflix Information Systems

Netflix continues to be profitable company as a result of its Management Information Systems which assist the company in making decisions. At Netflix, the Customer Relations Management System guides the company to make platforms more actualized for their end users. Netflix uses MIS to gather statistics about their clients (about what they had previously watched to use these data for suggestions regarding new shows and movies they think would be interesting to their purchasers). As a result, clients feel more gratified by the platform and hence prefer Netflix to other alternatives like Amazon Instant Video or Hulu (Raimond & Basilico, 2016).

Netflix has assigned IT staff with controlling the Inventory Information Systems which assist in streaming services. The company has also assigned IT personnel to handle the inventory information systems applied in DVD-mail service. Productive inventory management certifies that the business does well and continues its leadership position in the enterprise. Useful and practical inventory management also encourages Netflix’s growth to new markets. Netflix uses the sort of stock that is ideal for its company, for example, it uses the serialized inventory for its online streaming business. In this case, products are controlled based on their exclusive serial numbers or codes. For instance, every movie has its serial number. The aim of this type of inventory is to make sure that Netflix efficiently oversees its products and services. Barcode scanners and other supplementary technologies are used for serialized inventory to provide improved inventory processes (Relph & Milner, 2015).

In addition, Relph and Milner (2015) state that Knowledge Management systems allude to any IT system that collects and restores knowledge, enhances collaboration, finds knowledge base, supplies repositories for unseen knowledge, takes and utilizes knowledge, or in some other way improves the knowledge process. The Smart decisions are made by Netflix according to the data analysis. For instance, Netflix, after examining end user trends, selections and tendencies, decided that for instance a series ‘House of Cards’ will be highly profitable. This patterns marked by Netflix are familiar due to evaluating large sets of data computationally. In knowledge management, big data is of much use. Social association tools are widely known today as a part of knowledge management because they help collaborate and transfer knowledge. Netflix knowledge management takes advantage of social data, which includes feedback streams, conventions, and micro-blogging, but this information must be refined and added to other types of data, such as business intuition and lessons studied to provide practical comprehension of situations amongst others. Knowledge managers at Netflix keenly investigate the big data and include data analysis in the knowledge management tool box.

Netflix also employs the Decision Support System (DSS) for Business Intelligence as it plays an essential role in assisting its employees to find out what information is required so as to make smart and profitable business decisions. For instance, Netflix utilized DSS computer-based system to decide the winner of the million dollar challenge it broadcasted in 2006. The contest consisted in improving Netflix recommendation system by 10%. Netflix gave new rating information for prospecting ratings and a test data set to examine how distinctly the foreseen ratings of a movie meet actual successive scores. There was a trigger of a stir of activities amongst contestants. The first team was able to develop the system by 10.09% and the rest had 30 days to improve the method used by the first team. Another team developed this approach by 10.10%. The first team did not have time to respond and therefore, Netflix declared the second team the winner. Netflix had two verification tests to determine the winner. One was a secret, and the other was based on public standings. The winner of the million dollar challenge was selected based on the success of the approach regarding the secret data set. The use of the two verification tests is an example of how DSS helps make smart decisions.

Netflix’s Competitors

Amazon

According to Moskowitz (2015), Amazon.com Inc. is one of Netflix’s biggest competitors although most customers’ preferences lie upon Netflix because of its authentic content at a manageable price. Most of the favorite shows and movies, for instance ‘House of Cards’ and ‘Orange is the New Black’, which are known to many even if they don’t watch them, are suggested to be processed by Netflix. On the other hand, there are no shows or movies that one can quickly associate with Hulu or Amazon, which are the major competitors of Netflix. Amazon Prime is sustainable as one pays $8.25 per month, but it lacks high-feature content. Despite this fact, Amazon would never be outnumbered as it is highly innovative.

Hulu

Hulu belongs to the 21st-century FOX, the Walt Disney Co., and the NBS Universal. Services offered by the latter have a shortfall of clear direction and change. In addition, when streaming shows or movies Hulu displays advertisements which interrupt their viewing and because of this, customers prefer using Netflix to watch the same content as it has no advertisements and the price is the same. Hulu also has fewer selections compared to Netflix but one can find shows that appear a day after they are broadcasted on TV.

HBO

An offer made to HBO Go. is $15 per month by Time Warner Inc. (TWX). Moskowitz (2015) states that HBO showed more original content in 2014 compared to Netflix. As a result, HBO emerged as the content leader. HBO viewers are sometimes compared to Netflix’s ones. In general, Netflix continues to show growth year after year.

Services provided by Netflix, Amazon Prime Instant Video, and the new straight-forward Hulu service offer valuable on-demand content at a cheap monthly cost. Every service has different ways to provide wide entertainment choices to the whole family, and they are continuously becoming a preferred choice to the pompous pricing of cable and satellite dues. There are advantages and disadvantages of each service and one’s choice to use this or that service depends on the kind of shows a person enjoys watching. Despite this general view, Netflix is still the standard to beat.

Conclusion

There are various ways in which Netflix can upgrade its technological means and since its very establishment, the company has cultivated a culture of innovation. The clients have a presumption that Netflix will continue to improve its technology to bring more suitable actualizations in a bid to satisfy their end users and achieve success. Netflix also gladly receives the public who want to join in resolving their engineering challenges with an aim of improving Netflix’s service. Netflix continues to be a remarkable service provider.