Netflix Analysis Essay

4250 Words 17 Pages
Contents
Porters 5 Forces Analysis………………………....……………………3 Entry………………………………………………………………3-4 Rivalry…………………………………………………………….4-5 Substitutes…………………………………………....…………….5 Supplier Power……………………………………………………5-6 Buyer power………………………………………………………..6
Competitive advantage………………………………………………..6-10
Identifying challenges…………………………………………...…..10-13
Reference…………………………………………..………………….14

5 Forces Analysis of the Video on Demand Industry
By offering streaming movies through its website, Netflix is entering the Video on Demand (VOD) industry. This industry, along with DVD rentals (both from online providers such as Netflix, and cable services such as On Demand and Pay-Per-View), is part of the larger industry of “watching movies in the
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This huge investment and its risk keep a lot of investors and entrepreneurs away from this field.
Third, advanced technologies are also required. Capital is not the only resource a company needs to entry the online video rental industry; technology and technologists are extremely important as well. Because every service will be provided through internet and all the system will rely on those technologists to develop, to update, and to maintain, advanced technology is the core of the company’s development. To hold the technology and attract technologist, hiring, training, retention, advancement, and compensation practices will be an important task for the managers.
Another reason why new companies are hard to entry is that customers are loyal to existing brands. According to Netflix’s report, by the second quarter of 2014, there were more than 50 million subscribers globally (Sharf, 2014). Netflix is already known and used by most of the internet users, and those customers already look using Netflix as a part of their life. Therefore, the new entrants will be very hard to change this loyalty of Netflix’s customers’.
Industry Competitors Currently, Netflix has many obvious competitive advantages, and is leading the industry. However, there are several competitors are directly competing with Netflix, and the competition is getting more and more intense.
Netflix is not only competing with the competitors in the movie rental industry, but also is in direct

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