Wait a second!
More handpicked essays just for you.
More handpicked essays just for you.
Netflix industry competitive structure
Strategic Analysis Of Netflix
Operations strategy of netflix
Don’t take our word for it - see why 10 million students trust us with their essay needs.
Recommended: Netflix industry competitive structure
Netflix Inc.
Company Background
Netflix Inc. incorporated in 1997 and made its first public offering in 2002. Netflix is an online movie rental service which provides its 3,000,000 subscribers access to over 40,000 DVD titles. Although Netflix stocks nearly every title available on DVD, it does not stock titles containing adult content. The Netflix program allows subscribers to rent as many DVD’s as they want, and keep them for as long as they want. Three DVD’s can be out at a time, as soon as one is returned the next DVD on the subscriber generated movie list is shipped out. The DVD’s are delivered for free by the United States Postal Service from regional distribution centers located throughout the United States. Netflix can have most titles delivered to 90% of its subscribers within one business day of the shipping date.
The company provides a personalized movie recommendation service that creates customized recommendations for the subscriber. This system is based on customer rental history and the ratings the customers provide to Netflix. The ratings system is a simple 5 star system where 1 star is equal to a bad movie and 5 stars is equal to an excellent movie.
Netflix also provides decision making information to the subscriber about each movie the company provides. This information includes the length, rating, cast and crew, special features, screen formats, and plot synopses. Netflix also provides movie reviews written by Netflix editors, subscribers, and movie critics. In addition Netflix provides the average rating that other subscribers gave the title, and displays other titles that the subscriber might enjoy.
Netflix has revenue sharing agreements with more than 67 studios and distributors, and also purchases titles directly from studios, distributors, and independent producers. The major competitors for Netflix are Movie Gallery, Trans World Entertainment, Blockbuster, and Intermix Media.
Industry Trends
Since 1999 the growth of spending on DVD purchases and rentals has been incredible. According to Alexander & Associates, “Rapidly growing consumer activity and spending has built this industry into a major market phenomenon. The DVD format for enjoying pre-recorded entertainment at home is extraordinarily popular and consumers are changing their behavior to accommodate it.”
• The VHS market totaled nearly $20 billion...
... middle of paper ...
...ble debt management by having the ability to pay its interest obligations easily. All four of these ratios show us that Netflix is in a good position to service both their long and short term debt obligations, and that they have kept their debt load low and under control.
We have found that the gross, operating, and net profit margins are showing us that the company is beginning to post some gains and are improving their profitability. In addition the ROI has increased nearly 4% and the ROE has increased 7%. We see this as a responsible rate of growth which allows sales and sales revenues to keep pace with the growth of the company. By controlling their growth Netflix has been able to expand its operations and control their debt.
Recommendations
Although Netflix has been extremely efficient about the way they are controlling their debt load we believe that they may be missing some opportunities to expand their services. Netflix could possibly free up some cash to explore the market opportunities for service to the video game enthusiast. Other than that we really think that if Netflix keeps improving at the steady pace its going, the company will have a bright future.
Netflix was able to learn from other organizations mistakes and fill the gap by satisfying some unmet need in the market by being prepared and being in the right place at the right time with the right product/service while being transparent with their customers. Netflix is able to add value with its recommendation engine which is very good at predicting what types of movies people are likely to want to watch.
The Netflix Company was founded in August 29,1997, by Reed Hastings and Marc Randolph. It was not until 2007, where Netflix started to expand to new territory by offering media streaming. Since introducing online media streaming they have become a multi-billion-dollar company. They surpass the net worth of Hulu by almost double their amount, showing how popular this video streaming service truly is. Along with any successful business, they must have policies they follow to calculate any revenue or investments.
Netflix is the leading industry in the movie rental business. They originally started out as a mail in movie rental and have expanded greatly. Now you can stream most movies
Currently Netflix is seeing mass amount of growth in its streaming customer base so there will be plenty of growth in the next few years allowing for Netflix GO to catch a hold of the new customer base. The threat that runs to parallel to this is that many more streaming services are on the rise and are beginning to gain popularity such as Hulu Plus, HBO Go, and Philo TV. These services could mitigate the number of subscriber growth that Netflix is currently receiving or could develop a similar streaming product such as Netflix GO. A second opportunity for Netflix is the partnership with a large tablet producing corporation such as Microsoft or Sony whose sales may be threatened by Netflix Go. In contrast, the threat becomes whether or not one of these tablet producers is resistant to a partnership with Netflix to produce Netflix GO or partners with another streaming service such Hulu Plus instead.
Netflix’s annual growth has grown from $1.2 billion to six times the rate, $6.8 billion.
Social media activities are known to be effective tools to building program engagement as well as becoming a promotional net to attract more viewers. This would in turn build loyalty among viewers and increasing ratings growth. Netflix has spent little in advertising in relative to other companies and has always relied on word of mouth as our main marketing tool. Studies have shown that the power of word of mouth can be amplified and intensified through online and social media engagement.
Technology is the most important factor to thrive in the market. Technological advancements will help lower the operational costs for Netflix. However they need to have great content quality. Innovation stands out in their technology. As long as there are innovative strategies executed, Netflix will be equipped to handle fierce competition. Netflix’s success will depend on its product differentiation and content quality, provided with its innovation, high quality and performance delivery. The industry will move towards mass customer distribution and the profits can be achieved by more subscriptions. (Paramesh 2013).
Netflix offers streaming entertainment content to its customer as well as DVDs and Blu-Ray Disc content by mail. Netflix now, has 29.2 million people in the US subscribed to its $8-a-month streaming plan, which is, for the first time, greater than HBO’s domestic subscription base of 28.7 million. The cable TV industry’s stagnation has had its own trouble signing up new subscribers. (Outside the US, the situation is much different: HBO has a huge lead over Netflix. Offering VOD through online streaming Netflix was the first to enter the market giving them a competitive advantage over HBO in international markets. Netflix entry into the VOD market strategy was to offer specialize product that catered to the consumer preference and economies of scale and cost advantage.
The company that will be analyzed in this critique is Netflix. Netflix is a provider of on-demand internet streaming media available to viewers in all America and parts of Europe. Netflix allows a wide range of ages to watch a variety of different movies and TV shows. Before making a long term commitment to Netflix, people have the chance to use a Free Trial. The Free Trial for Netflix is available for 1 month. People are able to watch unlimited movies and TV episodes over the Internet on a Netflix-enabled device. After the month is up, people will then decide if they want to continue to use Netflix as a member, or decide to cancel the membership. Netflix is a month to month subscription which is $7.99 (Netflix, 2014). Netflix was introduced
They found out that DVD subscriptions and streaming was becoming two different companies. So they went back to either unlimited DVD rentals or streaming for one low cost each. I believe it was a short-term public relations nightmare, because I think they finally found what they were looking for and they are drawing people in currently. I have been a Netflix customer for a while and I am very happy with their services and programs. I think they are trying to catch up with the other services out there because they recently have started putting newer movies on their stream quicker than normal. I also believe past customers and customers now are a lot happier with their new services. Netflix will continue to grow and I think will be the best streaming service. Recently Netflix has been making their own original shows and I think it’s benefiting them greatly. Netflix's originals get better ratings on average than other Netflix content (such as TV shows licensed from legacy networks). Netflix originals have an average rating of 3.87 stars (out of 5), higher than the 3.47 stars "other content" averages. Originals perform 11.5% better
Netflix was the first and largest digital movie source available to the home consumer. However, competition amongst new providers has changed the amount of content available to them as well as how they proceed in acquiring new material. With new providers on the rise, studios can choose whether to source their material to Netflix. Starz choose to no longer provide their programming license to Netflix beginning in 2012 (Ferrell & Hartline, 2014). Competitors like Amazon and Hulu are working to obtain studio content rights to bring some of the same content to their service as Netflix has (Ferrell & Hartline, 2014). Facing strong competition from other services to obtain licensing rights, it has become ever more important for Netflix to develop
Vertical integration inquires a business to have control over the steps within their supply chain (Lin, Parlaturk & Swaminathan, 2014). To remain competitive with other entertainment subscription services, Netflix is developing original programming material to maintain current subscribers and attract new ones (Ferrell & Hartline, 2014). Developing their own programming gives Netflix control over the content, licensing rights and marketing opportunities within. As of 2012, Netflix had designated $75 to $100 million of its budget to attracting new subscribers based on original programming that they had created (Ferrell & Hartline, 2014). Netflix has been highly successful with their original programming being nominated for many awards and
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.
Previous Next Comcast, the largest cable company in the United States, already provides an extensive library of on-demand movies. On Wednesday it announced it would provide an additional 250 movies every month to its digital cable customers at no extra charge. In total, Comcast customers will be able to select from about 800 movies each month.
1) Netflix’s currently does not have a user-friendly method for customers to stream videos onto television sets. Netflix is entering agreements with the manufacturers of game systems, Blu-ray disc players, and televisions to include software capable of streaming Netflix videos. 2) 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.