In 2003 Netflix, the world's largest online movie rental service, must formulate a strategy for responding to entry by Blockbuster, the world's largest "brick-and-mortar" video rental chain, into online distribution and expansion by its closest competitor, Wal-Mart. Netflix's strategy must also respond effectively to the potential threat to its entire business model posed by video-on-demand, which promises to deliver video directly to the home through high-speed Internet connections. In developing its strategy, Netflix must consider the impact on competition of the pricing structures and vertical relationships present in the industry.
