Swot Analysis Of Netflix

Powerful Essays
• Studio Power; The major entertainment studios in Hollywood control film release windows and distribution rights, which are two primary determinants for Netflix’s acquisition costs and profits. Therefore, if the studios decide to decrease the 4-6 week gap between DVD releases and VOD releases, Netflix would lose a major strategic advantage.
• Intensely Competitive Market; the home video industry covers a broad range of viewing platforms, services, prices, and technologies. There are a number of unique competitors that could potentially provide home video cheaper than Netflix. Since most viewers subscribe to a handful of these competitors, and few have switching if a new competitor emerges with greater streaming capacity and lower prices, Netflix’s business model could be severely jeopardized.

The analysis of the company reveals that the performance of the company shall be improved and enhanced with the selection of the accurate and befitting strategic option. Netflix is the largest online movie rental service provider and offers a library of over 100,000 DVD titles, 12,000 of which can be streamed instantly online, to its ten million subscribers. Netflix’s DVD titles include movies, television, and other filmed entertainment products. Along with an extensive collection of titles, the Netflix service also includes access to movie ratings, reviews, and personalized movie recommendations.
Netflix ships DVDs to customers through first class mail and rentals are then returned in pre-paid envelopes. The entire transaction is free of cost to the customer. To ensure timely deliveries and returns, Netflix has established an extensive distribution network of shipping centers across the United States. Recently, Netflix h...

... middle of paper ...

...o maintain profitability and market share in the long-term it must align the Studios’ profit interests with its own. To accomplish this the first recommendation is for Netflix to vertically integrate with a studio. Vertical integration would reduce costs for both the Studio and Netflix by cutting out the transaction costs associated with negotiating licensing and distribution terms for streaming content. This would be especially beneficial to Netflix because their current streaming selection lacks diversity, depth and quality. A vertical integration would also benefit Studios in that they could replace obsolete DVD distribution channels with a brand name digital distributor. a back up recommendation is for Netflix to use its leveraging potential by taken on debt and continuing to aggressively negotiate profit sharing schemes with Studios, Networks, and Distributors.
Get Access