Question 1

Fixed costs vary according to production volume.

Accepted Answer

A) True 
 B)False

Question 2

At Netflix, the marginal cost for digital goods is zero for all licensees.

Accepted Answer

A) True 
 B)False

Question 3

Although Netflix had a larger distribution network than rivals, other firms could build a similarly large warehouse network. Why was the size of the Netflix DVD-by-mail customer base critical to repelling rivals?

Accepted Answer

While Netflix's warehouse network and pr...

Question 4

Provide a brief description of the basics of the Netflix DVD-by-mail business model.

Accepted Answer

Netflix was started as a DVD-by-mail ser...

Question 5

What solution has Netflix come up with to address the need to deliver content to customers' televisions?

Accepted Answer

A)   Netflix has entered into a revenue sharing agreement with Apple to produce customized set top boxes.
B)   Netflix makes custom chips for television makers so they can offer Netflix in a way that replicates Google Chromecast and Amazon FireTV.
C)   Netflix launched a self-branded hardware division to build and market its own set top boxes.
D)   Netflix has acquired Vudu, a firm that specializes in the online streaming business.
E)   Netflix provides tools to firms seeking to build Netflix access into their devices.

Question 6

How is Comcast vertically integrated?

Accepted Answer

The firm owns a cabl...

Question 7

Cinematch develops a map of user ratings and steers users toward titles preferred by people with tastes that are most like theirs.

Accepted Answer

A) True 
 B)False

Question 8

User ratings act as _____ for Netflix's customers.

Accepted Answer

A)   marginal costs
B)   fixed costs
C)   switching costs
D)   variable costs
E)   barriers to entry

Question 9

_____ refers to a limit, imposed by the Internet Service Provider (e.g. cable or telephone company) on the total amount of traffic that a given subscriber can consume (usually per each billing period).

Accepted Answer

The answer of _____ refers to a limit, imposed by...

Question 10

Explain the long tail phenomenon at Netflix.

Accepted Answer

The long tail is a phenomenon whereby fi...

Question 11

A low _____ is usually key to a firm's profitability because acquiring a customer is more expensive than keeping one.

Accepted Answer

A)   subscription fee
B)   inventory size
C)   churn rate
D)   switching cost
E)   opportunity cost

Question 12

________________ refers to a ruling which states that a firm can distribute physical copies of legally acquired copyright-protected products. This enables services such as libraries and video rental, but this right does not apply to streaming digital copies.

Accepted Answer

The answer of ________________ refers to a ruling which states...

Question 13

Collaborative filtering is a classification of software that:

Accepted Answer

A)   is used to gather user ratings and calculate a gross average user rating for each movie.
B)   provides Netflix users with parental controls and other options while streaming movies online.
C)   selectively sorts movies based on their censor ratings and delivers age-appropriate search results.
D)   monitors trends among customers to personalize an individual customer's experience.
E)   collates user ratings for a movie and creates a ranked list of movies most liked by users.

Question 14

Choose the correct
-Why is the "First-Sale Doctrine," including understanding when it does and doesn't apply, relevant to Netflix?

Accepted Answer

A)   It means content acquisition costs for DVDs are more predictable than streaming costs.
B)   It means that content acquisition costs for streaming are more predictable than DVDs.
C)   In cases of streaming media, it facilitates a shift of bargaining power to content suppliers.
D)   In cases of streaming media, it facilitates a shift of bargaining power to firms paying to license content from suppliers.
E)   None of the above.F)  a & dG)  b & cH)  a & cI)  b & d

Question 15

The Netflix customer experience was always weaker than the in-store experience of DVD rental firms, which had human staff. However, consumers were willing to overlook their dissatisfaction given Netflix's other benefits.

Accepted Answer

A) True 
 B)False

Question 16

Even though Netflix is now mainly focused on digital distribution, it continues to offer the DVD-by-mail service in its base-price product.

Accepted Answer

A) True 
 B)False

Question 17

Netflix has used the long tail in the DVD-by-mail business to its advantage, crafting a business model that creates close ties with film studios. What do film studios stand to gain from taking advantage of the Netflix model targeted at increasing the firm's long-tail offerings?

Accepted Answer

A)   Discounted fees for marketing some of the less-popular titles from the studios
B)   A cut of the subscription revenue from every disk sent out by Netflix
C)   Greater bargaining power with movie rental firms such as Netflix, Blockbuster, and Wal-Mart
D)   Lower costs related to screening movies in cinemas by releasing them straight on DVD
E)   An equal share of revenue from the digital distribution model through online streaming

Question 18

Netflix's initial revenue model was based on a flat-rate monthly subscription fee rather than a per-disc rental fee.

Accepted Answer

A) True 
 B)False

Question 19

Netflix uses data to create tailored audience promotions.

Accepted Answer

A) True 
 B)False

Question 20

Describe Netflix's streaming video business model.

Accepted Answer

Today the firm is focused on digital dis...

Exam 4: Netflix in Two Acts: the Making of an E-Commerce Giant and the Uncertain Future of Atoms to Bits

A low _____ is usually key to a firm's profitability because acquiring a customer is more expensive than keeping one.

Correct AnswerverifiedShow Answer

Describe Netflix's streaming video business model.

Correct AnswerverifiedToday the firm is focused on digital dis...View AnswerShow Answer

Although Netflix had a larger distribution network than rivals, other firms could build a similarly large warehouse network. Why was the size of the Netflix DVD-by-mail customer base critical to repelling rivals?

Correct AnswerverifiedWhile Netflix's warehouse network and pr...View AnswerShow Answer

How is Comcast vertically integrated?

Correct AnswerverifiedThe firm owns a cabl...View AnswerShow Answer

Cinematch develops a map of user ratings and steers users toward titles preferred by people with tastes that are most like theirs.

Correct AnswerverifiedShow Answer

________________ refers to a ruling which states that a firm can distribute physical copies of legally acquired copyright-protected products. This enables services such as libraries and video rental, but this right does not apply to streaming digital copies.

Correct AnswerverifiedShow Answer

Collaborative filtering is a classification of software that:

Correct AnswerverifiedShow Answer

Netflix uses data to create tailored audience promotions.

Correct AnswerverifiedShow Answer

Even though Netflix is now mainly focused on digital distribution, it continues to offer the DVD-by-mail service in its base-price product.

Correct AnswerverifiedShow Answer

At Netflix, the marginal cost for digital goods is zero for all licensees.

Correct AnswerverifiedShow Answer

User ratings act as _____ for Netflix's customers.

Correct AnswerverifiedShow Answer

What solution has Netflix come up with to address the need to deliver content to customers' televisions?

Correct AnswerverifiedShow Answer

Provide a brief description of the basics of the Netflix DVD-by-mail business model.

Correct AnswerverifiedNetflix was started as a DVD-by-mail ser...View AnswerShow Answer

_____ refers to a limit, imposed by the Internet Service Provider (e.g. cable or telephone company) on the total amount of traffic that a given subscriber can consume (usually per each billing period).

Correct AnswerverifiedShow Answer

Choose the correct -Why is the "First-Sale Doctrine," including understanding when it does and doesn't apply, relevant to Netflix?

Correct AnswerverifiedShow Answer

The Netflix customer experience was always weaker than the in-store experience of DVD rental firms, which had human staff. However, consumers were willing to overlook their dissatisfaction given Netflix's other benefits.

Correct AnswerverifiedShow Answer

Netflix's initial revenue model was based on a flat-rate monthly subscription fee rather than a per-disc rental fee.

Correct AnswerverifiedShow Answer

Fixed costs vary according to production volume.

Correct AnswerverifiedShow Answer

Explain the long tail phenomenon at Netflix.

Correct AnswerverifiedThe long tail is a phenomenon whereby fi...View AnswerShow Answer

Netflix has used the long tail in the DVD-by-mail business to its advantage, crafting a business model that creates close ties with film studios. What do film studios stand to gain from taking advantage of the Netflix model targeted at increasing the firm's long-tail offerings?

Correct AnswerverifiedShow Answer

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Today the firm is focused on digital dis...
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While Netflix's warehouse network and pr...
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The firm owns a cabl...
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Netflix was started as a DVD-by-mail ser...
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The long tail is a phenomenon whereby fi...
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