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netflix competitive competencies
proposed strategies for netflix
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Video Rental and Streaming has partly been of the most significant avenues of the general home entertainment industry in the United States for many years. It promotes constructive development through various channels such as Information Technology, Public Multimedia and it also has a huge impact on people’s lives and their entertainment on demand. One of the best companies which provide this high-advanced service is Netflix, Inc (Netflix). It was incorporated on August 29th in 1997 in California by Reed Hastings & Marc Randolph; listed on NASDAQ as NFLX in 2002. Netflix is the world’s largest Internet subscription service streaming television shows and movies with over 40 million members in 40 countries (Netflix, 2013).
Netflix operates in three sections: Domestic DVD, Domestic Streaming and International Streaming. The Domestic DVD section offers DVDs-by-mail subscription services, whereas, the Domestic Streaming engages in access to content delivered over the Internet to various connected devices such as Macs, smart TVs, PCs, mobile devices, Blu-ray players, game consoles, Internet video players and digital video recorders. Besides that, The International Streaming segment provides the streaming services principally in the United Kingdom, Canada, Sweden, Norway, Denmark, Ireland, Finland and Latin America.
In this paper, I would like to analyze Netflix’s distinctive strategies based on their competitive advantage and how it covers from its strategy mistakes in the high threat industry as well as give some viable suggestion for the future development of the company.
Part I. PESTEL ANALYSIS
In terms of the political and legal landscape, Netflix could be involved in changing laws as regards copyrights of confident kinds of con...
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...mpetitive and it is difficult in order to make greatly effort for the company to keep up its competitive advantages. In addition, the company now already has global brand name and customer loyalty as well as reasonably healthy financial situation after recovering some its mistakes. Netflix could build up further its strategic plans through several viably emerging trends in the marketplace such as network neutrality, video gaming along with transmedia properties and second screen engagement. As mentioned, video games and second screen engagement could be good choices and opportunities for the company to be ongoing health in long-term. However, it should also be noted that Netflix must be committed to take action in the greatest way appropriate to international expansion approach, meeting the challenges forward and finally come out on the top of the ladder once more.
Expand outside of the U.S., Puerto Rico and United Kingdom (where technology is moving at a slower pace and people are not as familiar with Netflix or VOD).
“Stock of the online DVD rental company was up more than 15% in early morning trading Thursday. Netflix increased their forecasts for both revenue and total subscribers today, trying to compete with powerhouses like Blockbuster and Wal-Mart. The increased forecast stems from a slew of new subscribers that have invested in the service after a price decrease from $21.99 to $17.99 last month. Despite the increases in revenue and subscribers however, some analysts feel that the business model is “fatally flawed” and the company may fall by the wayside due to competition from the aforementioned retail and entertainment powerhouses.” Investors Guide reported this.
In this case study we will gain a better understanding of TiVo, Inc. and how it has struggled to find success in a market they are known to be the innovator. At this point there are very few television viewers in North American that do not know what TiVo does for TV viewing. However, most consumers do not know the history or struggles this company has been through since creating the product in the late 1990’s. After reading this case study it is clear the creators of the TiVo were visionaries but it is also clear they were not business people too. Sadly, this might be the eventual demise of the company that clearly had the market in the palm of their hand. We will examine some of their flaws and how TiVo might regain some of the momentum to become a profitable organization.
§ There are a large number of substitute products. Netflix is in the business of providing personal entertainment at an affordable cost. Since any other form of entertainment is considered a substitute, Netflix?s industry is in direct competition with all other forms of entertainment, whether it be reading, physical exercise, regular television, etc. If trends in popular culture move away from those related to movies, revenues may be affected.
The video rental industry began with brick and mortar store that rented VSH tape. Enhanced internet commerce and the advent of the DVD provided a opportunity for a new avenue for securing movie rentals. In 1998 Netflix headquartered in Los Gatos California began operations as a regional online movie rental company. While the firm demonstrated that a market for online rentals existed, it was not financially successfully. Netflix lost over $11 million in 1998 and as a result significantly changed the business model in 2000. The new strategy included focusing on becoming a nationally based subscription model and focusing on enhancing the subscribers experience on their website. The change in strategic focus has allowed Netflix to grow into the largest online entertainment subscriptions service in the United States with over 6.3 million subscribers (Netflix).
Reed Hastings, co-founder of Netflix headquartered in Los Gatos, CA, began the company’s operations in 1997 after receiving an enormous late charge from a movie rental he returned long overdue. However, Hastings had the desire to be different than traditional movie outlets; whereas, customers had to drive to the location, pay a certain amount for each movie they rented, and were given a deadline in which to return the movie. Instead of using a method established by other video markets “to attract customers to a retail location, Netflix offered home delivery of DVDs through the mail” which eventually led to a booming business towards streaming forms of entertainment (Shih, Kaufman, & Spinola, 2009, p. 3). Today, Netflix exists along with several competitors; however, offers the most streaming content available for viewing, and continues to grow its subscriber base both domestically and globally. Although, direct and indirect competitors, acquisition costs, and several barriers present a financial threat for Netflix, the company has managed to grow with the acclamation of partnerships, expand to international territories, and vastly increase its price in shares of stock.
In conclusion, the vast technology change opens many opportunities for Netflix to grow. By assessing the market environment and challenges, it enables Netflix to overcome the obstacles to remain as the market leader. To achieve the future growth, Netflix should implement both strategic and tactical approaches to compete with others. The strategic and tactical business plans for Netflix are improving content libraries, developing more partnership with production firms, and staying with the low-pricing strategy.
Streaming video content over the internet continues to grow in popularity with consumers for a variety of reasons, including the widespread availability of high speed internet, attractive video content, easy to use video streaming devices and the rising cost of cable television service. Some consumers use streaming video to enhance or supplement the typical offerings available from their local cable provider. Others take a more extreme approach and use streaming video as a means to eliminate the need for a cable television subscription altogether. Presently consumers cancelling their cable TV subscriptions are still considered a minority of all subscribers; nevertheless their steadily increasing numbers have earned the moniker of “cord cutters.” Those looking to ditch cable TV can also find a growing number of online resources that will ease their transition to cheaper online television viewing.
Analysts suggest that the network growth year over year could be higher than Netflix sub growth rates. The growth rates some are stating are 20%-25% year over year. Management has stated that this kind of growth would be considered incredibly strong. I believe that management is trying to be very careful with any wording on growth in the future. I believe this because they have a conservative viewpoint of having
[1] Halal, Bill. "How NetFlix Beat Blockbuster: An Exemplar of Emerging Technologies." William E Halal RSS. N.p., n.d. Web. 09 Dec. 2013.
According to the history of movie rental, home video, and gaming, Netflix was the first company to introduce the movie rental service back in April of 1998 and offered more than 900 titles (Lardener, 2010). Ever since, the industry has become larger with new technology such as online streaming and next day delivery. Also, more competitors are now available and provide the same services, such as Amazon, Wal-Mart, blockbuster, and Redbox kiosks.
As the firm moves forward, top managers must pay attention to staying unique to sustain a competitive advantage. Netflix does not own their content, nor do they have any tangible assets. Netflix is a part of a broad range of network users. As technology continues to grow exponentially, Netflix will have to be readily adaptive to change and innovation. Technology never stops growing and evolving, therefore, Netflix’s business platform should never stop growing and evolving. At the same time, they must be careful to remain user friendly and customer centric by keeping the technology at a level where users will not have to obtain a certain set of technological skill sets.
Netflix was established by Marc Randolph and Reed Hastings in 1997 in California. Initially, the company offered a DVD-by-mail service for a monthly, flat rate subscription fee. Videos were sen...
The twenty year journey of Blockbuster has not been without bumps, valleys, road blocks, and detours. Blockbuster has come under legal fire from Netflix, a major online competitor, the Free Trade Commission for attempting a host...
There is strong competition with other companies that offer video streaming at no extra charge. Additionally, Netflix and its competitors are attempting to enter the digital world. Digitally offering television shows is an area of competition that has previously been controlled by