Final answer:
Netflix started as a DVD subscription service and added a streaming service while keeping the DVD service active. Over time, consumer preference shifted towards streaming, though Netflix initially underestimated the continued demand for DVDs.
Step-by-step explanation:
The main answer to the student's question is option b, Netflix began as a DVD subscription model and then simultaneously introduced a video streaming subscription while maintaining the legacy business. This evolution from a physical DVD service to an online streaming service indicates Netflix's ability to adapt and innovate within the entertainment industry.To further explain, Netflix initially started as a DVD-by-mail service, where customers would rent DVDs that were sent to their homes. However, as technology and consumer preferences changed, Netflix introduced video streaming, allowing customers to watch movies and shows online. Despite this addition, Netflix continued to offer its DVD service, recognizing the importance of catering to a diverse customer base with varying preferences. Eventually, the consumer trend shifted towards a stronger preference for streaming, showing a substantial increase in numbers of Netflix subscribers over time.In conclusion, while Netflix did start with physical media, it effectively transitioned to digital, and the success of its streaming service is a testament to its forward-thinking approach and ability to adapt to changing market dynamics. However, Netflix's missteps included underestimating how many customers still valued the option of physical DVDs, which provided an opening for other companies to cater to that demand.