Netflix : Friend Or Foe? Essay

1090 Words Nov 28th, 2015 5 Pages
Catherine Barton

Professor Woz

Finance 3770

November 28, 2015

Netflix – Friend or Foe? Netflix, created in 1997, revolutionized the way people watch movies. As Netflix began to deliver DVDs to your door, convenience overtook the trip to the video store. When their streaming infrastructure was deployed, consumers no longer needed to even visit their mailbox. This business model has transformed the home entertainment industry and has identified Netflix as the leader in this industry.
The massive Netflix subscriber base, currently at 69 million worldwide, is a magnet for content providers. Content can be licensed to Netflix for an additional near-passive revenue stream. The Netflix subscriber base has grown faster than most analysts expected, and the company has proven to be nearly impervious to subscriber rate hikes. This should be a recipe for a mutually beneficial business alliance, however, recent developments may be telling a different story. For years, Netflix has refused to brand content with network identification, resulting in viewers being oblivious as to where current episodes can be viewed. Additionally, Netflix is now producing original content in the form of television series’ and feature films. This has created an environment in which the traditional network’s ad revenue is waning, and it is beginning to appear as though the content providers have helped to create a competitor, instead of simply dealing with a distribution partner. If content providers were…

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