Jason Dunn
Organizational Theory and Practice
Assignment 1
For Assignment One I have chosen to write about Netflix, one of the world’s most prominent
streaming services. Founded on August 29, 1997, by Reed Hastings and Marc Randolph, these men
aimed at creating a better solution for viewing movies after having a few bad experiences with
Blockbuster’s late fees on returning the DVDS. Located in Los Gatos, California, Netflix is ranked 115 on
the Fortune 500 and 219th on the Forbes Global 2000. Netflix currently has 11,300 employees and is
traded as a public company. The company has international offices worldwide, including locations in
France, Brazil, South Korea and the United Kingdom.
Netflix started as a mail based rental business in 1997 and operated using this model until 2006
when management decided streaming should be a top priority. Netflix saw great success using the mail
rental model, as shown in its revenues. Netflix first went public in 2002 selling its stock at $15.5 per
share. In 2003 Netflix made $272 million in revenue, by 2004 Netflix made over $500 million in revenue.
Netflix saw great growth each year as more households turned to ordering their DVDS through the mail
rather than at a physical store such as Blockbuster. Furthermore, Netflix was one of the major factors in
the ultimate bankruptcy and closing of Blockbuster stores worldwide.
In January of 2007 Netflix launched its online streaming service, as the internet service
bandwidth in the mid-2000s was strong enough to support the service’s usage to all customers with
WIFI access. In early 2013, Netflix started creating its own original programming with the release of
Hemlock Grove. Original programming has become a priority for Netflix, which now releases original
content multiple times each month. Netflix now has many original movies and tv shows that have
become beloved and discussed worldwide, including Stranger Things and Orange is the New Black.
Netflix original movies have now won 8 Oscars for its films and 54 nominations.
The current design of Netflix is streaming media and video on demand, now accessible through
most devices. Some of the devices that can be used to stream Netflix on include web browsers, iPhones,
iPads, Smart TV’s, Video game consoles and digital media players. This wide accessibility is one of
Netflix’s strongest aspects, which gives the subscriber many different options to use the service virtually
anywhere. One central interface allows for the user to pick what they want to watch, from a multitude
of movie and tv show options. The interface allows for the user to pick by any sort of filter, whether that
be Comedy movies or drama tv shows. Netflix has been praised for its accessibility and easy to
understand control menu and is used by people of all ages all over the world.
One of the theoretical frameworks discussed by Richard Draft in his book Organizational Theory
and Design that connects with Netflix’s story is intense competition. As discussed on page 29, the
growing global interdependence creates a competitive environment for companies to find their
competitive advantage. Since Netflix’s streaming debut, many companies have tried to follow suit such
as HBO Max, Hulu, and Amazon Prime Video. These companies have seen the great success that Netflix
has found and have become intense competitors fighting to have more subscribers.
Another theoretical framework that applies to Netflix is from the reading “Engaging
Organizational Worlds” by Christina Garsten and Anette Nyqvist. The framework connection is the
use of “Membership” in the management of Netflix. As discussed on page 11 of the reading, one of
the key characteristics of an organization is its membership. One of the main aspects of a
membership is that members have different access to the resources of the organization, and Netflix
has many different leadership roles with varying levels of access. For example, Maria Ferreras is the
Global Head of Partnerships and has access to the worldwide partners that Netflix does business
with. Only Maria would have certain access to this data that other members of the team would not.
Marian Lee is the Chief Marketing Officer and focuses on how to best advertise and portray Netflix to
the world. Marian and Maria have differing levels of access but are united under one common goal:
To see Netflix succeed.
Regarding current problems that Netflix is facing, the company has recently been in a sharp
decline as it has lost 1 million subscribers in just 3 months in 2022 alone. The stock price has plunged
downward 71% since November of this year, and the main causes has been claimed to be because of
fierce competition. Netflix’s original programming has a hefty total cost, and the releases may not
come out for a year or more after the filming has finished. One approach Netflix is planning to take is
to release a cheaper, Ad-Supported version of the service to allow for those with less flexible income
to still use the service.
Despite all these challenges, Netflix still has the largest user base out of all streaming services
and is still able to function at its high level. For reference, Netflix has 220.6 million subscribers
worldwide, while HBO MAX has 74 million and Disney+ has 87.6 million subscribers worldwide.
Netflix continues to be one of the most popular streaming services and has many more projects
scheduled for the future, including a gaming service in which the subscribers can choose from
Netflix’s game catalog and stream the game right to their tv.
One positive impact Netflix is striving for is its impact on the environment. In Marc h 2021,
Netflix announced that it will work to reduce its greenhouse gas emissions to zero by the end of
2022. This follows the growing trend of companies working for positive social impact.
In conclusion, Netflix is a company that came from humble beginnings, two people who were
tired of the frustrations with renting DVDS came to a solution of mailing the DVDS directly to the
consumer and have ended up creating the largest streaming service in the world. Their worldwide
impact has brought streaming to the forefront, as now people prefer to watch their media in the
comfort of their own homes rather than going to the theater, especially since the COVID -19
pandemic. Netflix has shown that it has what it takes to be the most popular streaming service to the
current consumer public.