Cost Leadership - Netflix

Even though firms can produce the same products, they can have very different costs. Some of the reasons are (1) size differences and economies of scale, (2) size differences and diseconomies of scale, (3) learning-curve economies, (4) differential access to factors of production, and (5) technological advantages independent of scale. 

Netflix's seems to have established itself as a cost leader through (5) technological advantages independent of scale. Netflix was the first video rental and video streaming company to establish a cost advantage due to their implementation of different technologies. In terms of technological hardware, Netflix has saved money by not having actual storefronts. They only needed storage facilities for the portion of their business that mails DVDs to residents. They have also made advances in technological software through implementing various ways to stream videos online. Some of these examples are the blu-ray player, Ninetendo Wii, the PlayStation 3, etc. Netflix has definitely taken the technological advantages approach to establish cost leadership in the video rental and video streaming business.

Source: Jay B. Barney's Gaining and Sustaining Competitive Advantage