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are allowing consumers to purchase more customizable packages, which in return could result in lost consumers or lost potential consumers. A great opportunity that Netflix is continuing to capitalize on is their in-house content production. With shows such as House of Cards and others that they are developing, signing up new consumers for their low price is a vital opportunity. Netflix also has the opportunity to expand to other continents, although the licensing requirements have not been figured out. Netflix has the American content, but needs to iron out how to get it into the hands of other
NETFLIX7countries. It is a huge opportunity for them. With firms looking to enter into the market, Netflix has the opportunity to team up with another firm to expand their customer base and create economies of scope. Operations cost for Netflix is expensive. They spend large amounts of money purchasinglicenses that will most likely only get more expensive with time. Another of Netflix’s biggest threats is the federal government and what it will decide to do with the Internet. With Netflix using 34% of the Internet, it seems likely that net neutrality will eventually hurt Netflix in some way (Fitzgerald, 2014). The cost to make quality content that will continue to allow word of mouth marketing to spread the business could soon turn into a spending spree between firms. That threat is too costly for an already cash strapped Netflix (See Exhibits A - D charts).Competitive Forces, CPM, Ratio Analysisa. Competitive forces analysisThe five forces of Porters will be utilized to analyze Netflix as follow: Competition in the industry. The competition is very high in this industry. Competitorscome with different affordable option to gain customers. For instance competitors came up withdifferent way to rent movies, such as cheap kiosk movies rental with games rental to attract everyone, and newest movies video on demand. While Netflix is at time showing old movies and has no game to compete. Netflix competitors own great levels of capital and reach economies of scale. Netflix has low levels of products distinction and needs to expand competition to stay in business.Potential of new entrants into industry. Since there are so many firms in this industry, a new potential entrant is very small. It is because entering this industry will cost a lot of money to whomever. This new entrant will have to come up with new ideas to challenge the other firmswith a lot of promotion and buy expensive products.
NETFLIX8Power of suppliers. The bargaining power of supplier is powerful. The movie rental industry is able to charge higher prices while promoting quality images and services. They sign contract with different movie studios and able to profit from showing the newest show and renting the hottest games. Redbox is one of the leaders in this industry by renting their movies atlowest cost while raising the price on their game rentals.