Final answer:
Netflix's vast DVD-by-mail selection provides a scale advantage, strategically benefiting its competitive position. Economic elasticity plays a key role in understanding consumer reactions to price changes and competition. Netflix's growth in subscribers reflects a successful pivot towards streaming services.
Step-by-step explanation:
The student's question pertains to a competitive advantage that Netflix possessed over its rivals due to its significantly larger DVD-by-mail title selection. Out of the provided options, the best fit to complete the sentence would be a scale advantage. A scale advantage implies that Netflix, by offering over one hundred thousand DVD titles, has leveraged economies of scale to provide a broader selection than its competitors, who can only offer up to three thousand titles. This differentiation in offering creates a strategic benefit in attracting and retaining customers.
In an examination of the larger context of Netflix's business model and the effects of competitors and price changes, we consider the concept of elasticity. Elasticity measures how the quantity demanded by consumers responds to changes in price. In the early 2010s, Netflix navigated challenges due to emerging competition from services offering streaming and physical DVD rentals. Despite increasing competition and potential misjudgments in the demand's elasticity, Netflix's subscriber growth suggests a transition in consumer preference towards streaming video, indicating a successful adaptation of its service offering.