Video Rental and Streaming has partly been of the most significant avenues of the general home entertainment industry in the United States for many years. It promotes constructive development through various channels such as Information Technology, Public Multimedia and it also has a huge impact on people’s lives and their entertainment on demand. One of the best companies which provide this high-advanced service is Netflix, Inc (Netflix). It was incorporated on August 29th in 1997 in California by Reed Hastings & Marc Randolph; listed on NASDAQ as NFLX in 2002. Netflix is the world’s largest Internet subscription service streaming television shows and movies with over 40 million members in 40 countries (Netflix, 2013).
Netflix operates in three sections: Domestic DVD, Domestic Streaming and International Streaming. The Domestic DVD section offers DVDs-by-mail subscription services, whereas, the Domestic Streaming engages in access to content delivered over the Internet to various connected devices such as Macs, smart TVs, PCs, mobile devices, Blu-ray players, game consoles, Internet video players and digital video recorders. Besides that, The International Streaming segment provides the streaming services principally in the United Kingdom, Canada, Sweden, Norway, Denmark, Ireland, Finland and Latin America.
In this paper, I would like to analyze Netflix’s distinctive strategies based on their competitive advantage and how it covers from its strategy mistakes in the high threat industry as well as give some viable suggestion for the future development of the company.
Part I. PESTEL ANALYSIS
In terms of the political and legal landscape, Netflix could be involved in changing laws as regards copyrights of confident kinds of contents, for instance movies and television shows that the company relies on to offer consumers. Any alteration in copyright law that influences an ability to distribute these contents to subscribers may perhaps considerably affect business. The reason is these contents can signify large segments of the company’s product offering. Netflix depends upon content licenses from entertainment studios since it does not actually produce any contents, and any changes in the licenses could ruin its business model (Fritz, 2009).
Netflix hinges on the attractiveness of movies and TV shows among customers in target marketplace segments. Since standard age of the people grows elder and movie as well as TV shows utilization in the middle of the older demographic turns out less popular, business strategies would be decidedly negative. Furthermore, if the online content becomes ostracized in large areas, business would be unfavorably affected as more movies are online streaming.
In order to keep up competitive advantage, it is required to cost competitively against rivalries. Netflix is operating in the industry that depends on the non-refundable earnings of consumers. Whether economic growths were stagnant, the purchasing power of...