Netflix SWOT analysis

 Strengths

The optimization of content suggestions- the company has been able to optimize on the recommendations that they make on for their customers. This has seen the company grow their library viewership (Trefis, 2013). This has meant that a lot of viewers are able to subscribe to their vast library. This is a win-win concept for both the company that has an increase in customers while the customers have variety to choose from.

Competitive advantage- the company was the very first to provide streaming services to the customers (Thompsonet al., 2007). To date, this has served as leverage to the company that is now viewed as the fastest in the entertainment provision industry.

Ready devices- the company has devised a method where they are able to partner with device providers in this deal, the device providers have to incorporate Netflix associated apps in their devices. Some of the devices have even been fitted with buttons that would effectively launch the Netflix apps once they are pressed. This ensures that the company’s customers have easy access to its products from whichever devices they are using.

Agreements on revenue sharing- the company has been able to set up a number of agreements with regards to revenue sharing with other. These agreements are mainly applicable in the pay-per-use packages that they have with other service providers (Duncan, 2011). This ensures that both parties are able to benefits from the arrangement and make profit.

Weaknesses

Storage and delivery of content- the storage of the company’s content is through amazons cloud storage. This particular medium is also used to stream the content to the customers. Amazon has recently also entered the same market as that which Netflix operates in which translates to conflict of interest as well as competition between the two companies.

Supplier bargaining power- most big films are produced by equally big studios. These studios have the bargaining power as far as setting the prices of their films are concerned.

Faults in management- the company has over the years had bad relations with its customers as far as pricing is concerned and while this may effectively be out of their league at times, it has managed to deal a blow in the company’s reputation (Trefis, 2013).

Opportunities

Internet growth- today so many countries are able to access high speed internet that is relatively affordable. This means that the company’s opportunity to expand to other countries is also equally increased.

Independent studio growth- the company does not need to be held hostage by the prices and terms of the big studios since there are so many smaller studios that have come up that are able to provide quality content. This means that the company can be able to negotiate for better deals even with the bigger companies due to the strong competition.

Mobile internet growth- the rate at which mobile internet is growing is at an alarming rate. This means that the number of individuals that can access videos via streaming on the internet has been able to increase significantly (Shields, 2014). The same can be said for the ease access to mobile devices that are able to support the web streaming.

Improved Infrastructure capability- the prices of a lot of bandwidths packages have significantly been dropped by bigger providers such as times Warner (Flacy, 2013). While this might mainly be attributed to competition, it is an added advantage to the company for it will mean that they use less costs.

Threats

Internet fraud- recent years have seen a spike in internet fraud related crimes. This means that the customers are reluctant to pay for the company’s services because they can access those services for free elsewhere.

FCC- net neutrality regulations have not been expanded by FCC. This means that content providers such as Netflix can be charged streaming content fees by ISPs.

Porters five analysis

The movie industry is one that is extremely competitive. This is because of the large number of companies that are involved in this particular business. It should also be considered that the amount of sources where customers can be able to access movies at cheaper rates and even for free has increased substantially. Competition also means that the switching costs that are available for the customer are considerable low and consumers now have to choose between varieties of low cost entertainment service providers.

The company however does not necessarily have to care about the threat of new entrants. This is because this particular business of stocking up on entertainment requires a substantial amount of capital and capacity. The large companies that already exist have already established know brand names that are relatively hard to beat. There is also the cost of capital spent on adverts and marketing.

The company has however to be alarmed as far as the threat of substitute products is concerned. This is because people do not necessarily have to watch movies. They could watch television, listen to music or even browse on the internet. There is also the fact that there is a large of people who still prefer renting their movies.

Buyer burgeoning power is very high. A lot of buyers have brand loyalty and while individual buyers are not likely to make any effect, the larger picture is altogether different. It should also be considered that the switching costs have considerable changed to either low costs or no costs at all.

There is moderately high supplier bargaining powers. This is because they are able to impose their own prices or even reduce the quality of the films they produce. This is likely to have an effect on the company’s profits (Lieberman, 2013).

 

 

 

 

 

 

 

 

 

 

 

 

Bibliography

Trefis. "How Big Can Netflix's U.S. Streaming Business Get?"

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Duncan, Geoff."Netflix Buttons Coming to Remote Controls." Digital Trends. Digital Trends, 4 Jan. 2011. Friday, 6, 2015 .

<http://www.digitaltrends.com/home‐theater/netflix‐buttons‐coming‐to‐remote‐controls/#!C0LFT>.

Shields, Mike. "First Netflix and Amazon. Now Yahoo to Get Into TV Programming Game." CMO Today RSS. The Wall Street Journal, 05 Apr. 2014. Web. Friday, 6, 2015. <http://www.deadline.com/2013/04/netflix‐viacom‐networks‐deal‐ expire/>

Flacy, Mike. "Likely Pressured by Google Fiber, Time Warner Ups Speeds, Slashes Rates." Digital Trends. Digital Trends, 1 Feb. 2013. Web. Friday, 6, 2015.

<http://www.digitaltrends.com/web/pressured‐by‐google‐fiber‐time‐warner‐ups-speeds‐slashes‐rates/#!C023g>.

Thompson, A. A., Strickland, A. J., & Gamble, J. E. (2007). Crafting and executing strategy: The quest for competitive advantage. Boston: McGraw-Hill/Irwin.

Forbes. Forbes Magazine, 07 Mar. 2013. Friday, 6, 2015.

<http://www.forbes.com/sites/greatspeculations/2013/03/07/how‐big‐can‐

Lieberman D. Apr 22 2013. “Netflix Says it Will Let Viacom Deal Expire.” Retrived from Web Friday, 6, 2015.

<http://blogs.wsj.com/cmo/2014/04/05/yahoos‐plans‐for‐tv‐splash/>.

 

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