How much would profit fall if you eliminated all late fees?

1. Please write the Netflix “CEO’s Letter to Shareholders” for December 31, 2011 (the case period).
2. Also, please write a memo addressing this scenario: Put yourself back in the year 2000 in the Blockbuster CEO’s office.
   1. How much would profit fall if you eliminated all late fees?
   2. How much would profit fall if chose not to cut late fees and lost some customers to Netflix in the following two years as a result?
   3. Based on these calculations, what would you have done?
   4. What threats does Netflix face today?
   5. Why did Netflix propose splitting into two companies?
   6. Was it a bad idea or a good idea executed badly?
   7. Why did Netflix not face many other competitors in the DVD-by-mail business?
   8. Why didn’t other firms succeed in challenging them?

1-2 page memo