Situation Analysis The article began by introducing an awful reality for the Netflix Company: in just three months, stock prices had fallen by 75% and the company had lost 800,000 subscribers. This rapid change in consumer’s attitudes was based solely on a pricing decision that Netflix recently made. No longer could subscribers just pay $9.99 for DVD rentals and free online streaming-they would now have to pay $7.99 for DVD rentals and an additional $7.99 if they wanted to continue enjoying online streaming. For the typical Netflix subscriber, their rates went from $9.99 a month to $15.98 a month. However, to understand why Netflix made this decision, a brief history and understanding of the company is necessary. Netflix began as a mail delivery
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Its first weakness is the lifespan of the product. Shipping is hard on DVDs and it is estimated that each DVD was only good for 24 round trips. Early loss of a product is costly, and was a substantial weakness for the company. The second weakness is the lack of variety with online streaming. Many subscribers liked using online streaming more than the hassle of mail order DVDs, so they quit that subscription and only paid for online streaming. However, they were met with a narrow product selection, which caused disfavor among consumers. This lack of product diversity was another weakness of the company. The third weakness is the accessibility of the product. Many families do not have access to internet, and even if they do, it might not be high-speed internet capable of streaming movies. This inability to distribute and make the product easily accessible is a major weakness for the company and reduces the potential amount of subscribers. In addition to its strengths and weaknesses, Netflix’s opportunities are multitudinous. One opportunity is expansion of the product line through video game rentals via mail or digital streaming (technological). Another opportunity is the potential to expand their market globally, which will be possible as more and more countries gain access to the internet (economic). A final opportunity is to expand the type and variety of movies available through online streaming. For example, Netflix could offer classic movies, which would appeal to their older subscribers
Its first weakness is the lifespan of the product. Shipping is hard on DVDs and it is estimated that each DVD was only good for 24 round trips. Early loss of a product is costly, and was a substantial weakness for the company. The second weakness is the lack of variety with online streaming. Many subscribers liked using online streaming more than the hassle of mail order DVDs, so they quit that subscription and only paid for online streaming. However, they were met with a narrow product selection, which caused disfavor among consumers. This lack of product diversity was another weakness of the company. The third weakness is the accessibility of the product. Many families do not have access to internet, and even if they do, it might not be high-speed internet capable of streaming movies. This inability to distribute and make the product easily accessible is a major weakness for the company and reduces the potential amount of subscribers. In addition to its strengths and weaknesses, Netflix’s opportunities are multitudinous. One opportunity is expansion of the product line through video game rentals via mail or digital streaming (technological). Another opportunity is the potential to expand their market globally, which will be possible as more and more countries gain access to the internet (economic). A final opportunity is to expand the type and variety of movies available through online streaming. For example, Netflix could offer classic movies, which would appeal to their older subscribers