1. What were some of the key structural and infrastructural elements that defined Netflix s supply chain strategy before 2011? After 2011? 2. How have the customers order winners for Netflix s customers changed over time? Would today s customer be satisfied by the delivery performance or selection of Netflix s “old” supply chain? 3. At the end of 2013, Netflix still had 39 distribution centers mailing DVDs to seven million subscribers, although the latter number had fallen by half from the prior year. Should Netflix abandon its physical distribution system altogether? Why or why not?” NETFLIX, at almost 20 years old, has more than 44 million subscribers worldwide and is now the most popular subscription media business in the United States.14 In the fourth quarter of 2013, Netflix had estimated total revenue of nearly $1.2 billion.15 But the road has not always been so smooth for Netflix. In 2011, Netflix dramatically changed its business strategy from one based on the physical distribution of DVDs and Bluray discs, to one based predominantly on the direct streaming of entertainment content across the Internet. This case study looks at the impact on Netflix s supply chain strategy. Netflix s Supply Chain Strategy, before 2011 Before 2011, Netflix s supply chain strategy mixed information technology and physical logistics to replace traditional brick and mortar stores, such as Blockbuster. The Netflix Web site not only served as a virtual storefront but also used custom
