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Strategic Management Netflix Case Study “Will Netflix Be Able To Maintain Its First-Mover Advantage In The Global Streaming Battle?” FAYEMI Elliott LIN Ting An Alina SHAPOVALOV Artyom TAN Wai Onn Shannon TAPALA Kevin TAPIO Alexander
Will Netflix Be Able To Maintain Its First-Mover Advantage In The Global Streaming Battle? 1. Introduction Established in 1997, Netflix delivers on-demand video streaming through their online subscription service. By paying less than 10 euros a month, users have unlimited access to over one million gigabytes of movies, TV shows, documentaries and Netflix Original series. Some of the most-watched TV shows on Netflix include Stranger Things, Tiger King and The Walking Dead. The company also offers free-trial memberships to new members and certain re-joining members. Today, Netflix has 182.8 million subscribers and revenues surpassing $20bn. In order to stream the content efficiently via the internet, Netflix uses the services of third-party cloud computing services such as Amazon Web Services and other content delivery networks. 2. Industry Review Porter's Five Forces Framework is used to analyse the balance of power and competition in a particular industry and therefore, its overall profitability. The Five Forces consist of Industry Rivalry, threats of substitutes, threats of potential entrants, strength of buyer power and strength of supplier power. Buyer’s Power: The online streaming industry is driven by subscriptions and content creation. Most consumers have minimal buying power. These buyers are not price-sensitive, most of the streaming services are all in the same price range; Content, quality, and the ability to access content drives consumer behavior. Netflix currently costs between $9 - $16 monthly compared to Hulu with $6 - $10. Historically, Amazon Prime was also a competitor but its inability to create content rendered its streaming service inferior to Netflix. Furthermore, there are a limited number of online streaming services providing the same form of content in multiple geographies like Netflix. Most of Netflix competitors are in the US/Canada market. Some of them consist of Hulu, HBO, and Disney +. However, Hulu is mostly an online live television streaming service. HBO and Hulu do not operate outside the United States Furthermore, whereas content creators obtain rights to stream tv shows such as Friends, the real competitive advantage/power lies in the ability to continuously create original content. Netflix has been able to do that better than its competitors. The existing competitive advantage leads to a higher consumer cost to switch networks. Furthermore, the ability to create content has led to a shorter supply chain and ultimately a greater ability to implement backward integration. This has been with the emergence of Fox and Disney streaming services which were two television and movie studios.

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