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Netflix Porter's 5 Forces

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The industry that Netflix operates in is video on demand. Netflix is a leader within their industry. The profitability of this particular industry has done very well since its inception. Netflix specifically has done so well that brick and mortar stores (like Blockbuster) have either seen significant declines or even closed all together. I believe that this is very much due to the convenience of video on demand. With the rise of technology a person can now watch any show at any time. This can be done without waiting in line to rent or being worried about late fees. Netflix in one of the best known name in Video on demand and has done many things to keep itself at the top of the industry. I believe this is one of the main reasons …show more content…

This is going to present some challenges. The first challenge I see is the competition. Other companies (like Amazon) already have an international base and have their own VOD(video on demand) service. Also moving into new markets means that there will be new competitors that may already have a strong hold in those countries. I would recommend Netflix market test their subscription service starting in large metropolitan areas and then use polls/questionnaires to get feedback in the new areas. Another significant threat for Netflix is the technology itself. Not every country will have the same system and not every country will have the infrastructure to support a system like Netflix. For a company that is entirely technology based these are two very important but separate hurdles. For the system requirements Netflix will need to hire and maintain a group of the best IT people from the areas in which it chooses to operate. Those IT people will need to collaborate with the current system IT to fix any gaps that are present in the separate systems. For the hurdle of infrastructure Netflix will need to partner with either government or private company entities to make sure the capability to stream videos is sustainable. This is another reason that starting in the metropolitan areas is a good choice. These areas offer the greatest number of potential customers with the least input in terms

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There are now ways to stream through the internet using services such a Hulu or Netflix at a very affordable cost. This allows consumers to watch hit TV shows and movies at a fraction of the cost jeopardizing the cable industry and how they can

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The availability of movie rentals has taken a huge leap after blockbuster went bankrupt in 2010 (Satell, 2014, p.1). The novelty “Netflix” became a hit after Blockbuster went under. But the huge hit that sparked the consumer’s attention was the creation of “Redbox” in 2002 when McDonalds added Redbox to their LLC to improve the convenience of their customers. The concept of convenience has taken a huge leap in the past decade because of the huge developments in technology. The advancements in technology has also made brick and mortar stores either start to go bankrupt, like blockbuster, or has made the company create an online branch to their business.

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Redbox kiosks drove Blockbusters and other similar companies out of business. However, Redbox is now facing viability questions itself. The main factor leading to Redbox financial difficulties are the increasing consumption of entertainment on digital outlets like Netflix, Hulu, Amazon, and Charter and other pay-TV ops rather than DVDs or BluRays (Spangler, 2016). More importantly, some consumer experts feel that its inevitable consumers will not be renting movies from a Redbox kiosks (Spangler,

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Although they are experiencing extreme competition among the market, Verizon remains on top. This is credited to the diversification strategy that Verizon has put in place. They have adapted to the changing environment, and created new and innovative ways to sell products in the market. New products and services consistently lead the industry and Verizon has continued to be the market leader. They have also acquired companies that have already proven to be successful, in order to help them thrive in online and streaming

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While Redbox does focus on having the newest movies out for rent, most people do not want to spend the time to go and rent the movie. They would rather stay at home then go get it. Netflix became popular in Canada the same time it did in the United States. While the Redbox kiosks are not making a profit in Canada, they are making a profit in the United States, but not as much as owners of the company would hope. “Since the kiosks are not making a profit in the United States Outerwall has decided to close over 500 redbox locations in the United States.

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Netflix now has less users and is making less money, and would thusly have to increase the price of their subscriptions to compensate for this. Overall this translates to disastrous costs for consumers and the transformation of everyday online services into expensive

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Basically Netflix is in the entertainment delivery business and their list of competitors is quite extensive. Even though the original major competitors of Blockbuster and Movie Gallery are out of business, there are still many who compete with their original business model of shipping DVDs. Amazon, Walmart, and Best Buy are major sellers of DVD movies and Redbox provides more than 40,000 locations to pick up and return DVD rentals (Fritz, 2014b). Redbox provides the ability to order online and via mobile apps, which ensures the video will be waiting when you arrive at your local kiosk.

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But when Netflix updates its selection of movies or shows, they can be pulled off when the creators don't want the streaming service platform to show it anymore. If the show becomes very unpopular and very little people still watch the show, this can also happen. Basically someone can only watch movies in a movie theater three or four times a month when movies come out, not acknowledging the if the person wants to watch the movie(s) that come out this month. With a streaming service you can watch a different movie that you would like almost everyday. Everybody knows at the movie theater you can't watch tv or your favorite show.

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The threat of new entrants: New entrants are unlikely because of the demands of doing business associated with regular movies. This type of business requires a large amount of capital, began a large-scale infrastructure investment. Opportunities for new entrants could

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What this created was the interaction between Netflix and their customers and with this created and stronger relationship in their ecosystem. Another move that Netflix did was the agreement with entertainment production films; this deal was based in exclusivity of some products like movies, shows and series. With this action Netflix it’s having a better relationship with the production companies. What they gained from is been able to have a balanced ecosystem were one will produce this the case of the production companies and the other will distributed the product been this Netflix.

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As you have mentioned, it is necessary for Netflix to continue to leverage its competitive priority in an effort to lead the market. However, attempting to do so can prove to be difficult as well as inadequate in the long-run. The inevitability of the market itself changing in the long-term is looming over the video-streaming service market. In regards to the saturated competition within the market, Reed Hastings, the co-founder and CEO of Netflix, states “movies and television could become like opera and novels, because there are so many other forms of entertainment. Someday, movies and TV shows will be historic relics.”

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When Netflix was launched, there was a great change going on in the economy, which had a great impact on how the business is conducted in future. Economy was transitioning from manufacturing-based economy to a service-based economy, this happened because of new technological innovations enabled new ways of doing business. Another trend was the fast spread of DVD players in households, which laid foundation for early success of Netflix as a DVD rental provider. During this period internet was spreading very fast and Netflix successfully integrated the potential of online streaming which further strengthened its position in the market. In regards to Blockbuster, changing technologies shifted the market dynamics.

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Headlined by actors like Kevin Spacey, the announcement spawned heavy intrigue from not only Netflix customers, but from their competition’s audience as well. After

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The pricing for DVD mailing services also varies with the number of DVD a customer requests at a certain point of time. Further details of the pricing strategy according to the different segment are divulged below: • Domestic Streaming services Netflix offers a one-month free membership plan to new customers. Customers willing to continue Netflix membership after the trial period can subscribe to different plans according to their requirements.

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(Wozniak, 2014). In the United States the distributor and exhibitors make a movie rental contract.

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