Netflix has several different types of flexibility, but the point to highlight is using the option to expand to eventually abandon. As mentioned earlier in previous posts Netflix entered the market with the subscription mail delivery service which was successful and helped establish dominance in the process. Because of this success, Netflix was able to transition to an entirely new on demand video delivery model. Slowly, the mail service is being phased out as the on demand lowers distribution costs.
Netflix is also a great example of building a portfolio of options which includes positioning options, scouting options and stepping-stone options. Virtual reality is a realm where Netflix is positioning to see how the technology plays out. Netflix is constantly scouting to see what entrepreneurial ventures might pan out in their video streaming service. Finally, the original content development has certainly used the stepping-stone option. The bottom-line is that Netflix has quickly proven to be a flexible company staying ahead of the game in an industry where others less flexible (Blockbuster) have failed.
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