Vertical integration is when the supply chain of a company
is own and controlled by that company. Apple, Inc best demonstrates an example
of vertical integration. They are a hardware company plus a software company
plus a service company and at the end of the chain they are a retail company.
They control their product from the beginning to the customer.
Netflix in the
beginning was a provider of steaming media. Various companies produced the
content they provided and Netflix would pay a fee to stream them. In its recent
history, Netflix has started to vertically integration by becoming also a
producer of content. This has provided Netflix with an area that they have
exclusive rights that cannot be lost.
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