Netflix Milestone 2 CCF.docx - Netflix Inc Courtney...

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Netflix, Inc.Courtney FoxworthSouthern New Hampshire UniversityECO-201November 17, 2020
Microeconomic Analysis of Netflix Inc.Like many throughout the world, you may have watched “Stranger Things,” a Netflix original TV Show that is rated as the most in-demand original television series for 2019. (Balderston, 2020) If that does not sound familiar to you, then “Grey’s Anatomy” may ring a bell. Having originally aired on ABC in 2005, the most in-demand medical drama’s sixteen seasons are available for streaming through Netflix. (Balderston, 2020) With the increasing competition that confronts Netflix Inc., such as Hulu and YouTube TV, how can the company continue to be successful in the future?This paper reflects a microeconomic analysis of Netflix Inc. and consists of market trends, sales trends, and the supply and demand that impacts the company. It evaluates the overall market trends and market share analysis that impacts Netflix Inc. now and in the future. The paper reviews the price elasticity of products and services offered by the company along with how those affect their supply and demand, it looks at how the profitability is influenced by the cost of production, and how a multitude of costs can impact their profitability. The microeconomic analysis of Netflix Inc. will provide recommendations for the continued and future success of the company, and suggestions for remaining the number one online streaming service in the world. (Leger & Roberts, 2020)History of Netflix, Inc. (Netflix.com, 2020)In 1997 Reed Hastings and Marc Randolph had the idea to mail DVD’s, and after successfully shipping one to themselves, they began Netflix. They launched Netflix.com the following year, and debuted the subscription service in 1999, offering unlimited DVD’s without late fees, due dates, or monthly rental limits. Netflix relied on a recommendation feature that
used a subscriber’s ratings on prior rentals to make new suggestions. At this point, Netflix was off and running, providing the first of its kind services. In 2002, Netflix entered the stock market,selling at $1 per share at its initial public offering. The next year, at over one million members, Netflix received a patent for its subscription rental services. Over the next couple of years, Netflix improved its site by providing features for profiles and movie lists, all while membership continued growing beyond five million. 2007 brought a significant turn, Netflix.com began offering streaming services and building partnerships with consumer electronic brands, such as Xbox and Blu-Ray, to stream through their devices. Netflix saw a need to improve the accuracy of their recommendation system and offered a one-million-dollar prize to the person or team that provides the best solution. After almost three years, Netflix received a 10% improvement to their recommendation algorithm, and awarded one million dollars to the winner, Bellkor’s Pragmatic Chaos. During this time, Netflix continued expanding partnerships to internet connected televisions, known as

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