WWYD Netflix CEO Reed Hastings Started Netflix After Paying Blockbuster

WWYD Netflix CEO Reed Hastings started Netflix after paying Blockbuster $40 for a late return. Hastings and Netflix struck back with flat monthly fees for unlimited DVDs rentals, home delivery via prepaid postage envelopes, and no late fees. When Blockbuster, Amazon, and Walmart started their own mail-delivery video rentals, Hastings recognized that Netflix was in competition with some of the biggest companies. Three years later, Walmart abandoned the business, Amazon quit after four years of losses, and, 13 years after Netflix's founding, Blockbuster declared bankruptcy. Shipping and distributing DVDs, however, was not where Netflix wanted to succeed. The competitive advantage was in streaming files over the Internet. U.S. copyright laws, however, require streaming rights to be purchased from TV and movie studios before downloading content into people's homes. So Netflix needs to outbid its rivals for broad access to TV and movie content while convincing studios it is not a direct competitor. These two issues are organizational goals and they require planning to achieve them. The first time that Netflix tried streaming video, it took 16 hours and cost $10 to download videos. However, the company invested 1 to 2 percent of revenue every year in downloading to "fundamentally lower" mailing costs. Because of that investment and advances in technology, it now costs Netflix 5 cents to stream the video content of a full-length film. And Netflix can take the money it spends on mailing costs and put nearly all of it toward buying streaming rights from the studios.
To convince the studios that it's not a competitor depends on the strategy Netflix uses as a streaming company: It still maintains its DVD business. By holding to a 28-day delay in streaming content and providing high DVD sales for studios-which makes more money than theatrical releases-Netflix can negotiate contracts with such companies as Warner Bros. to ensure profitability for its partners and so get better rates and access to content than competitors. In the end, says chief content officer Ted Sarandos, "We see ourselves as complementary [to the studios]. If someone loves Weeds on Showtime, they'll … go find the older episodes from us." Refer to WWYD Netflix. When Netflix began to invest in streaming content technology as a means of achieving a long-term goal implicit in the company's name, it engaged in the management function of:

A) hiring
B) planning
C) leading
D) goalkeeping
E) innovating