Threats:
As mentioned above that video game market is an opportunity for Netflix. However, it can be treated as a threat at the same time. The company has not been in the video game market, and the only company in this market is Redbox. This factor may result in a decrease in the Netflix’s subscribers and creates a negative effect on the revenues of the company. There are many customers who like to play games along with watching movies on rent. For these customers, Redbox will become their priority because they would be able to get both the services from one website.
Another threat faced by the company is increasing in competition like Hulu, Amazon, and Comcast Online even YouTube has entered the movie streaming market. These competitors are offering video and bidding for exclusive rights as well. In addition to this, competitors are also making partnerships with each other like Amazon did with the Epix. Moreover, licensing cost for streaming videos are increasing, and that is becoming a major threat to Netflix. Along with video streaming, competitors are now offering their original video and programming. Examples include Amazon. With the passage of time, TV and Movie industry are least interested in doing business with online video services. Lastly, security issues and cyber-crimes are the other major threats faced by the company now days.
Internal strengths and weaknesses:
Strengths:
One of the major strengths that Netflix has is its selection of video database. Consumers of Netflix can choose from a wide range of videos for streaming services and rental business. Along with this, when it comes to movies that are difficult to find anywhere, Netflix has the competitive advantage of this over its competitors. Convenience is another strength that the company has right now. Now, the customers are not required to go to video stores. Because of the internet, one can have full access to their favorite programs and films at their homes. In addition to this, companies are able to make its position strong in the foreign markets and thus have dominance in majority of the market.
Costs are another strength of the company that differentiates it from its competitors. The prices offered by the company are extremely affordable. Out of all the companies and competitors in the industry the company is offering the lowest prices with top quality services. The videos provided by the company are not bombarded with advertisements and commercials that normally irritatesthe customers and create disruptions. Moreover, the company has produced original TV series as well, for instance, House of Cards. Netflix Company has first-mover advantage of instant video and program streaming. This advantage gave the company a high brand recognition in comparison with its competitors.
Weaknesses:
One of the major weaknesses of Netflix is the lacking in terms of new arrivals. In order to retain its existing customer database and to attract the new ones, it has become vital for the company to produce some new and innovative arrivals that can grab the attention of investors as well. As far as other competitors for Netflix are concerned, they are making attempts in bringing new content for the customers and that in turn attracted customers towards them as they found competitors’ offerings more appealing. In addition to this, the company is too much focused on the movie business. Moreover, the company is struggling to keep older demographics with new technology.
Furthermore, the contracts of the company with Sony and Star has been expired and that in turn resulted in loss of videos. Along with this, the reputation of the company hurt badly after making its attempt of increasing prices and separating its DVD and video business. Although, profits and revenues of the company are increasing, but the industry is now in the slow phase with no such remarkable growth and innovation.
Situation Analysis:
Year 2011 was the extreme downfall for the company as the executives of the company announced that they are going to split the DVD and its online streaming business. Those customers who are availing both services of the company have to bear an increase on its monthly subscription as well. Because of this sudden announcement regarding the split and the drastic increase in price, the company has to face a lot of protest and criticism from the customers. After analyzing the negative consequences and drastic response from the customers, the CEO of Netflix issued an email to all of its customers and asked for an apology. In that email, another announcement has been made by the Chief executive officer of Netflix that the company will separate the two businesses, and the two main business of the company will become two different companies. The DVD by mail business would be named as Qwikster and Netflix will be based only on Online streaming of videos..................................
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