Streaming Media and Video Content

1055 Words Sep 13th, 2013 5 Pages
Internal Rivalry
Looking strictly at the video rental industry, Netflix faces minimal internal rivalry because the industry is dominated by only a handful of firm in Europe, namely Blockbuster. Although Netflix faces little internal rivalry in its immediate industry, the company faces an intensely competitive broader market. Since home entertainment covers a broad spectrum of technologies and channels of distribution, Netflix is in direct competition with firms in a number of other industries including cable networks, who air movies on television, satellite companies’ VOD services, and websites like Hulu, which provide video content through online streaming. Furthermore, as people transition from consumption of physical DVDs to digitally
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To capitalize on these profitable complements to their streaming service, it is advantageous for Netflix to enter into joint ventures with companies that produce electronics.

Supplier Power
Netflix acquires its video content through direct purchases, revenue sharing agreements, and licensing agreements. These agreements, which allow Netflix to rent DVDs and stream video content, are primarily obtained from studios, networks, and distributors. Therefore, Netflix’s suppliers, e.g. studios, networks, and distributors, control the prices that Netflix must pay for its video content. The First Sale Doctrine, a copyright law stipulating that once a copyright owner sells a copy of their work they relinquish control of the work and the purchaser may redistribute the work as they wish, provides protection for Netflix with regards to redistributing DVD titles. However, the First Sale Doctrine does not apply to streaming content. Therefore, Netflix is especially vulnerable to supplier power during streaming distribution cost negotiations. The studios and distributors who license streaming content are in full control of the terms and conditions with Netflix and may rescind the availability of the content at will. As the DVD format becomes increasingly obsolete and streaming video content grows in popularity, Netflix become more susceptible to the power of their suppliers.
Another aspect of the in-home video entertainment industry, which substantially affects the