Five Forces Analysis
Powers of buyers: low. Other companies don’t have such recommendation system and service compared to Netflix, and also their monthly fees are higher. For buyers, switch cost is high.
Power of suppliers: high. Netflix buy movies from movie studios like Hollywood movie distributors, there is few substitute. (McLeod, 2015)
Threat of substitute: high. There are so many ways of entertainment besides online video service, such as reading and video games.
Threat of new entrants: low. It costs a significant capital to enter VOD industry and potential entrants cannot form economies of scale immediately, so there is obvious barrier to entry. (McLeod, 2015)
Rivalry among existing competitors: high. There are so many cable and satellite companies which provide VOD service that Netflix is engaged in price war competition in recent years.
Strengths: Netflix required to innovated new technology to complete against competitors who could also cut down the price. For example, Netflix emphasized on customers’…