Netflix Analysis Essays

Submitted By abcd5451
Words: 464
Pages: 2

Netflix is a company that revolutionized the watching of movies and television shows. Here is a brief history of Netflix. Established in 1997 in California, Netflix differentiate itself by providing online DVD rental service, while other competitors were mostly in store rental service. Over 100 distribution centres across the country allows 95% customers to receive DVD within one business day (Anon., n.d.). Ten years later, Netflix introduced online streaming service, which allows members to instantly watch television shows and movies on their personal computers. The movie and television library, and recommendation system make accurate suggestion movie to customers (Anon., n.d.). When Netflix is available on Apple iPad, iPhone and other mobile devices, it has attracted millions of subscribers. The convenience of access and relatively low price brought Netflix dominated position in the market. Since 2010, Netflix has focused on international expansion to increase revenue.

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.

SWOT Analysis
Strengths: Netflix required to innovated new technology to complete against competitors who could also cut down the price. For example, Netflix emphasized on customers’