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Los Gatos California-based Netflix Inc, was the world''s first and largest on-line DVD rental firm. The company, with its innovative business model, emerged as a strong player in the DVD rental industry. The convenience of ordering on-line and savings from late fees of the traditional video rental companies helped the company garner a huge customer base. As the on-line DVD rental model gained popularity, Netflix began to pose a threat to the established players like Blockbuster Inc and Hollywood Entertainment Corporation. Gradually, traditional video rental companies like Blockbuster and retail giants like Wal-Mart and Amazon.com also entered the on-line rental bandwagon. This case study offers a scope for discussion on the innovative business model of Netflix and how the business model posed a threat to traditional video rental stores. The case also details the initiatives taken by Netflix to retain its market share in the light of the increasing competition from much bigger rivals like Blockbuster and a threat of substitution from video-on-demand services. A structured assignment ''305-395-4'' is available to accompany this case.