As previously noted Netflixs leaders consider services such as Redbox to be

As previously noted netflixs leaders consider

This preview shows page 14 - 17 out of 50 pages.

As previously noted, Netflix’s leaders consider servicessuch as Redbox to be significant competitors (The Associated Press, 2009).Rivalry among existing competitors. Rothaermel (2013) writes, “Rivalry among existing competitors describes the intensity with which companies in an industry jockey for market share and profitability” (p. 67). There is a significant level of rivalry between Netflix and competitors such as Amazon, Redbox, and Hulu. One example of such a rivalry is the competition between the firms for licensing and exclusivity contracts.With the loss and gain of these contracts, each of the competitors experience varying degrees of fluctuation with regards to their respective levels of competitive advantage.CPM AnalysisThe competitive profile matrix (CPM) for Netflix indicates that the firm continuesto possess a competitive advantage over competitors such as Amazon and services such as Redbox. It is clear that Netflix has a loyal base of customers, strong levels of product quality, sound advertising strategies, competent management, price competitiveness, large market share, and is attempting to expand globally. However, in the area of global 14
BUSI 690-D06: Group Case Study 1: Netflixexpansion, Amazon begins with the advantage of already being an established firm with an international presence. Furthermore, Netflix’s struggles with entering the European market further emphasize the fact that Amazon and its Amazon Prime service maintains an advantage in this critical area. Coinstar’s Redbox kiosks are a relatively new development in the industry and appear to have lower market share than that of Netflix orAmazon. In fact, Redbox was required to raise its prices as it began to lose market share in 2014 (Henne, 2014).Analysis of Competitors’ RatiosIt is rather difficult for one to analyze the financial ratios of Netflix’s direct competitors. This is due to the fact that its closest competitor is the Amazon Primeinstant video streaming service, which is merely one segment of the Amazon.com structure. The data offered in Appendix F for Amazon.com represents the entire company. The same is true for Redbox, which is a segment of Outerwall. Despite these realities, the information presented is intended to provide a comparison of important ratios for the two firms.Analysis of DataNetflix has seen steady growth within the most current three years of data 2004-2006 as seen in Exhibit 1 and Exhibit 2. From an income perspective, Netflix saw growthin sales subscriptions, subscriptions, and fulfillment with increases in gross profits from 2004-2005. The change in gross profits between years has a delta of .27. Growth between2005 and 2006 in terms of income was much larger with a delta of .70. Gross profits increased dramatically from $217,663 in 2005 to $370,600 in 2006. This increase can be 15
BUSI 690-D06: Group Case Study 1: Netflixattributed to large growth in sales subscriptions, with comparatively less cost of revenues,resulting in increased gross profits.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture