Netflix Business Model & Strategy
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This document summarizes Netflix's business strategies. It includes a PEST analysis noting political issues like piracy and content licensing. A five forces analysis finds high threats from substitutes and new entrants. Netflix's core problem is the high threat from all five competitive forces, especially the bargaining power of suppliers and buyers. Netflix's strategy is to pursue market penetration through excellent service and low prices, focus on creating its own content, increase innovation spending, use pricing cautiously, transition fully to streaming, partner to optimize its platform, and maintain high availability distribution.
Netflix Business Model & Strategy
- 2. Content Company profile PEST analysis Five forces analysis Value chain Canvas model Core problem Differentiation matrix Canvas model +5 Strategy
- 3. No mission and vision! Statement Becoming the best global entertainment distribution service Licensing entertainment content around the world Creating markets that are accessible to film makers Helping content creators around the world to find a global audience
- 4. Company profile Founded in 1997 Flat rate DVD by mail Data mining Successful transition to streaming content >40M members, > 1 billion hours of TV Shows and movies per month
- 6. PEST analysis Political Social Piracy Wish to watch on tv screen, applicable Content licenses and copyright everywhere Economical Technological Unlimited market size VOD increased popularity, Need for high Technology applicable for all countries internet speed
- 7. Five forces analysis Threat of new entrants – high (Apple, Amazon, Hulu, Youtube) Threat of substitutes – high (Apple TV, Hulu) Bargaining power of customers – high (a lot of choice for substitutes) Bargaining power of suppliers – high (content is key) Intensity of rivalry – high (HBO, low entry barriers, major players present) Complementors – high (Microsoft, Wall-Mart, Roku, Vizio, LG)
- 10. Canvas Model
- 11. SWOT analysis Strenghts – Data, experience, # shows and movies Weaknesses – Fixed costs, high debt, system not flexible Opportunities – Europe, NEM, original content Threats – changing technology, rising prices, competitive markets
- 13. Core problem Threat of all five forces is high Power of suppliers and buyers is especially high Netflix is stuck between powers
- 14. Canvas Model +5
- 15. Strategy Pursue market penetration strategy by excellent service and low prices Focus on creating its own content to maintain competitive advantage Increase its innovation budget by 5% next year and continue to do so Use pricing as a last resort measure to increase margin Choose to stream content only, milk its mailing DVD’s within the next 5 years Create more partnerships to create perfect hardware platform for its software Continue its high availability distribution strategy