Netflix's Competitive Advantage And Profit Margins

2. Future: Hulu and Youtube. These two services also provide streaming service. Disney manages that Hulu has already provided some movies. Youtube has strong service and utilizes many people over the world. If Youtube got licenses to provide movies, this would be big problem for Netflix.

These first set of changes, cost the company one million customers and a ton of negative press in social media; including 12,000 comments of dissatisfaction. However, at this point, Netflix’s stock prices still rose. Unfortunately, on September 18, 2011, Hastings posted a new announcement to the company blog, trying to separate and over-complicate the two services. He then reversed the changes, in yet another memo, on October 11, 2011. By this point, however, it was too late; more displeased customers had left and Netflix’s stock prices had plummeted. Personally, I believe this situation caused a short-term public relations nightmare; to the customers who were affected at that time. Netflix retained over thirteen million subscribers; given time, I believe the new generation of customers will still be interested in the services they provide.

The way Netflix notified their customers aside, there is a main reason why they should have never raised their prices in the first place. Netflix did not have the pricing power to do this. Customers are attracted to Netflix because of their low prices, and when you take that out of the equation a lot of appeal is lost (Mourdoukoutas).

Netflix needs to stay with the current trends of customers world-wide, keep creating Netflix original series, and keep updating their system when new devices are invented or entertainment improves. Netflix is a phenomenal way to stream the best content that is currently available to users and if they continue to provide excellent customer service at an affordable rate then I will continue to be a loyal customer for many years to

The purpose of this paper is to help provide microeconomic analysis of Netflix Company to give an insight of the business market in which it operates. Ever want to rent a DVD and not have to worry about the return date, or stream a favorite TV show on the go? Now that dream is a reality thanks to Netflix allows people to rent DVD and Blu-ray without having to worry about the late fee or due dates. Along with the rental services, customers can stream movies or TV shows online anytime, anywhere all without commercials interruptions.

The streaming service has 600, 000 subscribers since September 30 rather than gaining 400, 000 they had predicted (Blogs, 2017). After realizing that its, then, new model is not going to be profitable anymore, they have now renewed a lot of their former contracts due to content owners didn't understand. The renewal of those contracts either costs them more or they lose the deal all together. Netflix offers unlimited video streaming for $7.99 a month; as well as gaming rentals. Such rates are a good deal for those with fast internet connection and a system able to display high definition graphics (Guina, 2017).

Netflix is an entertainment company that specializes in streaming media and online video-on-demand. Over the years, it has grown to include film and television production and other distribution services. Its business model has changed, and so has its overall production cost grown to keep up with the increased market share. As a result, its current position in the market has made it more exposed to competition from other firms, which is why it needs to develop new strategies to remain profitable. Netflix has grown over the past years despite competition and its unprofitability (Helft, 2007). Therefore, to understand its success, it is important provide a microeconomic analysis of Netflix, its history, its products, and the market.

Netflix has around 75 million subscribers today which suggests that it is a very popular organisation. Netflix at the moment serves many markets across the world whinch included the US and Europe. Netflix suffers from competition from companies such as Amazon prime. Both of these companies compete to gain customers in this compact market. Netflix's corporate strategy fits in with their business level strategy as they deal mainly with DVD rental via online streaming. The deal that is in place with Warner bros has a major impact on how Netflix conducts itself. If other online streaming companies don't face this deal of not being allowed to stream their contents untill 28 days after the public release date then other companies have a competitive advantage which would lower Netflix's revenue. This would cause customers to leave Netflix as they may be able to see films at an earlier date with rival

Growing competition as a challenge represents the various companies that are now entering the market of online media-streaming. Companies such as HBO, Amazon, Google, and Hulu Plus have all began to offer media-streaming on the same electronic devices as Netflix, Inc. Currently Netflix, Inc. remains in the lead amongst its competitors; however, there is no guarantee that this advancement is a permanent one. It is inevitable that emerging companies will come up with creative ideas to gain the competitive edge and receive more consumers. For example, Amazon.com has “amplified

The main problem facing Netflix is the pending conflict with its content providers. Netflix has low bargaining power both over suppliers and buyers, and this represents an existential threat to the business. Netflix has proven to be a popular service, but despite the successes of its first ten years, there is now evidence that it has not fostered much brand loyalty, and that its customers are quite price sensitive. Combine this with the fact that its content suppliers are becoming direct competitors in the online streaming business and Netflix is in significant danger of having its growth trajectory derailed.

The comparison industry is $195.39USD and it’s in the green. The company could improve by bringing the new shows out the next day, instead of waiting two years or later. As well they could do more promotions to bring in more consumers. Netflix greatest opportunity for improvement is helping people to find movies that they’re interested in viewing. Netflix has 20 Billion dollars in Debts and liabilities.

This also allows their content to be viewed virtually anywhere. The fact that they teamed up with Oracle to work on their website was a very beneficial move as this gives them somewhat propitiatory technology. I personally enjoy their recommendations and it is obvious that with their next arrival that they have strong logistics. They have a big cost advantage too. If I can stream a whole season of How I Met Your Mother in one day, I feel as though the $8.99 that I spent was a good investment and yet I still have another 29 or 30 days to go. The two times that I had to deal with their customer service; they quality of service was outstanding and I’ve heard many other wonderful testimonials. When looking at weaknesses, I feel that their inability to provide new releases is a major drawback. In addition to this, they need to amp the selection for online streaming since streaming is expanding rapidly. The issue at hand with streaming is that it can potentially lead to server crashes if there are too many users on at once. Netflix can also be very enticing to hackers since there is so much personal information stored. I would say that the biggest opportunity for Netflix would to be to make deals with the movie production companies to allow Netflix to offer new releases. To feed off of that, they need to increase their variety; particularly in the selection of indie and international films. With as

Blockbuster was too confident in their brand and their reach that failed to see the threat from the online rental business, meanwhile Netflix took advantage of their slow entrance to build a market and leverage on growing technology (DVD) that took off really quickly.

One the one hand, the fertility of the industry opened the doors to corporations that sighted substantial growth potential. New entrants with big pockets such as Walmart could pose a certain threat to Netflix, by exploiting a playing card based on cost reduction. On the other hand, barriers to entry became relatively significant as established video rental retailers such as Netflix have the experience and the knowhow to market movies to people. In this industry, firms that do not have a technological advantage can’t compete. The best example is Netflix’s CineMatch program that offered personalized film recommendations based on customer’s rental patterns. This way, Netflix was able to better serve its subscribers. From a cost perspective, the movie rental industry requires high capital expenditures, and the major expenses are highly related to acquisitions of DVD library and investments in technology (exhibit 2 continued). Thus, we may say that entry is difficult in this industry as the competing firms have reputation, experience and recognizable brand names.

Netflix Inc. is in the entertainment market, which is a part of a larger video, film