Netflix Is The World's Leading Internet Television Network

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According to Ernst & Young LLP (2015), Netflix “is the world’s leading Internet television network with over 57 million streaming members in nearly 50 countries (p. 1).” Since its launch in 2007, Netflix has expanded streaming services internationally into Canada, Latin America, and Europe (Ernst & Young LLP, 2015). However, to continue its success, Netflix must evolve with its business strategy, evaluate the company’s outlook, minimize risk factors, and analyze the auditor’s report that will help investors identify as relevant to an investing decision. Netflix has a business strategy that is composed of three business segments: domestic streaming, international streaming, and domestic DVD (Ernst & Young LLP, 2015). The two streaming segments (i.e., domestic and international) “derive revenue from monthly membership fees for services consisting solely of streaming content,” while the domestic DVD segment derives revenues “solely of DVD-by mail,” also from monthly membership fees (Ernst & Young LLP, 2015, p. 62). A subscriber can receive either streaming service or DVD service from one monthly membership fee, but not both (Ernst & Young LLP, 2015). Netflix has a neutral company outlook to its services because the market for entertainment services is very competitive and tends to change rapidly (Ernst & Young LLP, 2015). For instance, Netflix competes with video providers such as HBO, who now offers its own streaming services directly to the customer. As a result, it is
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