NetFlix: Update Business Model with VOD?

Since the publishing of the HBS case, Netflix has entered the video on demand (VOD) market. What is your analysis of how Netflix has attempted to update their business model with VOD?

It is my belief that NetFlix's decision to pursue Video On Demand (VOD) and ultimately incorporate this new revenue-generator into their overall business model was not only a great idea, but a necessary action. Just as NetFlix was able to look ahead, act on future trends, and get off the ground by attracting those individuals who were early-movers toward the new DVD movie format back in the late '90s and early '00s, they are continuing to be proactive and forward-thinking as they are preparing themselves and their business model for the day when DVDs (and other hard-copy media) are rendered obsolete and meet the same fate as that of the VHS format. As the media and telecommunications industries continue to converge, I suspect it would be more challenging for NetFlix to differentiate themselves from other VOD providers in the future; therefore, it will be easier for them to start moving in this direction now, before the DVD format becomes completely passe, and provide additional value to their current customer base rather than remain stagnant and find themselves losing subscribers who are moving to the budding VOD trend. NetFlix has also recently introduced a settop box similar to the Vudu Box with which AppleTV users are familiar. While this is also another step in the right direction, they need to maintain their focus on convenience, value, and selection. NetFlix was able to succeed because they set themselves apart from the competition; however, it is paramount that they continually look for newer ways to reach their niche customers while remaining on the cutting edge of video delivery technology.