Bus 800 Netflicks
Issues After a thorough analysis of Netflix’s business model including its competitive analysis, SWOT analysis and financial analysis, the three main issues have been identified. The issues include, the intense competition in the home entertainment industry, the suppliers’ bargaining power and the effect of movie-pirating.
Rational For Issues Within the video entertainment industry, Netflix’s biggest competitor is Blockbuster, as it remained the global leader in the industry in 2010 c-99). However, the firm faces intense competition in the home entertainment industry due to the broad range of technologies and channels of distribution (Appendix B-4). Netflix is in direct competition with cable companies and VOD streaming services such as Wal-Mart’s acquisition of Vudu, which enabled the delivery of entertainment content directly to Internet-connected TVs imposes a threat. The competition is further intensified by the availability of video streaming websites such as Amazon Video-on-Demand, Apple’s iTunes and Hulu. Many of these competitors have greater brand recognition, larger customer bases, and greater financial stabilities and resources (Appendix B-7). The related pricing strategy, quality of experience and service level of its competitors may adversely impact Netflix ability to attract and retain subscribers. Therefore, buyers have a strong level of power and could easily shift their preferences from Netflix to rival companies, thereby imposing a further threat to Netflix’s profitability. Moreover, if excessive numbers of subscribers switch their services to competitors, Netflix may need to incur higher marketing expenditures to attract new subscribers, thus business results may be adversely affected. Currently, Netflix employed a subscription-based business model in which it acquired its video content from movie studios and distributors through direct purchase, revenue-sharing agreements and licensing. Therefore, its suppliers such as Universal Studios,
Rational For Issues Within the video entertainment industry, Netflix’s biggest competitor is Blockbuster, as it remained the global leader in the industry in 2010 c-99). However, the firm faces intense competition in the home entertainment industry due to the broad range of technologies and channels of distribution (Appendix B-4). Netflix is in direct competition with cable companies and VOD streaming services such as Wal-Mart’s acquisition of Vudu, which enabled the delivery of entertainment content directly to Internet-connected TVs imposes a threat. The competition is further intensified by the availability of video streaming websites such as Amazon Video-on-Demand, Apple’s iTunes and Hulu. Many of these competitors have greater brand recognition, larger customer bases, and greater financial stabilities and resources (Appendix B-7). The related pricing strategy, quality of experience and service level of its competitors may adversely impact Netflix ability to attract and retain subscribers. Therefore, buyers have a strong level of power and could easily shift their preferences from Netflix to rival companies, thereby imposing a further threat to Netflix’s profitability. Moreover, if excessive numbers of subscribers switch their services to competitors, Netflix may need to incur higher marketing expenditures to attract new subscribers, thus business results may be adversely affected. Currently, Netflix employed a subscription-based business model in which it acquired its video content from movie studios and distributors through direct purchase, revenue-sharing agreements and licensing. Therefore, its suppliers such as Universal Studios,