Netflix's Competitive Advantage And Profit Margins

1099 WordsFeb 4, 20165 Pages
According to Shirley Pelts of Yahoo! Finance, in the United States, competition is intensifying for Netflix with companies such as Amazon Prime Instant Video, Hulu, and other media companies’ direct-to-consumer offerings, such as Time Warner’s HBO NOW. Netflix’s management is especially concerned about Time Warner’s over-the-top (or OTT) offering HBO NOW which they consider to be a “formidable global competitor.” HBO NOW is rapidly expanding around the globe to geographies including Spain, Nordic countries, and some countries in Latin America (Pelts, 2016). These companies pose serious threats to Netflix’s competitive advantage and their profit margins. Another thing that has caused Netflix major issues are poor public relations involving price raises that were communicated ineffectively to consumers. Netflix lost several customers due to this action, and even though executive action was taken in the form of letters to the public and nixing an idea to restructure the company, it still left a bad feeling in some consumer’s minds, and a lack of faith in the company. In addition to losing a multitude of customers that Netflix has to figure out how to get back, these poor decisions eventually lost the company a significant amount of stock value. According to Masha Zager writing for the NTCA, it is not even news anymore. Every time a video provider renegotiates a contract with a content provider—a broadcast station or a cable network— content prices go up. In the last few years,

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