CH10

Case Study

1 What are three challenges Netflix faces?

Firstly it doesn’t have many more subsribers in the US with most Americans already owning a Netflix account. Secondly international growth won’t be easy. And lastly it relies heavily on content from other media companies.

2         What are the key elements of Netflix’s strategy today?

Always giving customers to watch Netflix at the convenience of their android or smartphone. Netflix gives their customers a variety of movies and TV series that is not widely available with such high quality. New content is constantly coming out and Netflix needs to keep up with that. Being up to date is a high priority, since there is a lot of competition that can attract customers to cancel their subscriptions and subscribe elsewhere. They do this by making deals with large entertainment providers that will benefit them with the knowledge of which movie/TV series is best to purchase for the demand of the customers. Netflix is very organized with different categories; recently added, continue watching, every genre, top picks, and you can even customize a list of movies that you would like to watch. Through that, Netflix is able to sort out which movies you would like best through attaining the knowledge of the types of movies you like. Another huge key element to their strategy was their marketing; they gained a lot of attention from the marketing and advertising.

3         What are the implications of Netflix’s new strategy for the cable television systems like Comcast and TimeWarner?

Netflix began to work with cable companies to expand their content and build good relationships to benefit their business. Comcast is able to charge higher prices to their customers for better quality and if not paid their service would not be as good therefore slow loading times and delays. (They are a huge cable server that has recently teamed up with Time Warner, which makes up for one third of American cable providers). Many other cable companies have lost over 10 million subscribers since the release of Netflix. Since Netflix was paying Comcast for fasting and clearer quality service, Comcast was able to slow down Netflix’s service which forced them to pay millions of dollars to intermediate provider networks to insure high quality and quick streaming videos to their service. This affects their programming costs greatly since the costs are extremely expensive, but could potentially be worth it and attract more subscribers. Comcast owns a bunch of other providers such as TimeWarner but Netflix is one of the most successful out of the bunch. Netflix gets the advantage as well as the other companies associated with Comcast for their content to be distributed as quick as possible and with the best quality out of all other providers. This strategy of high-speed internet will forever be something that customers want and are appealed to. This worked for all these companies, making their customers feel more satisfied with the service they are being provided with. Netflix made a deal with Comcast to have their content be distributed, rather than going through an intermediate, which helped them with their costs and have made them the biggest success. Netflix is such a powerhouse that within the next year, millions of people will cancel their TV cable subscriptions and keep their Netflix account, due to faster and better quality videos.

4         Why is Neflix in competition with Apple, Amazon, and Google, and what strengths does Netflix bring to the market?

Netflix is in competition with other successful companies such as Apple, Google, Yahoo, and Amazon. Apple allow customers to watch any movie or TV show with a single purchase of their Apple TV, a subscription of $30-40 is necessary to have complete use, while Netflix is only receiving a quarter of that per subscriber (H, 2015). Amazon has a monthly subscription to purchase, rent or live stream any TV show or movie and the company also created an app, therefore allowing customers to have more availability to this service. Netflix also has an app, but these other competitors have been in this business much longer and have the finances to keep up with the technology and new software’s to enhance their services every year. Google is used every day to search information, pictures and mostly videos and it's free, no subscriptions. The first browser that pops up on a screen is usually Google, therefore making them extremely powerful and a threat to Netflix. Yahoo is in direct competition with creating their own content to be aired and hopefully gain more subscribers. These companies are all very different, yet similar in the same way, and subscribers are the only way to make it.

Projects

1. Go to Amazon and explore the different digital media products that are available. For each kind of digital media product, describe how Amazon’s presence has altered the industry that creates, produces, and distributes this content.

Amazon offers a bit of everything from digital media to the physical versions of said media. It’s real breakthrough when it came to digital media was when Amazon started out by selling books online, and soon developed e-books which scrambled the book industry. It created a demand for digital media that was unheard of. And soon enough, Amazon almost had a monopoly in the e-book industry as no one else could match their product variance or service levels. For the music part of Amazon’s digital media portfolio, they haven’t really disturbed the music industry in the same way as they did with e-books because of companies like iTunes, but Amazon have helped the music industry to convert to the digital format, also with a lot of help from Spotify. For music and TV series, Amazon has quite the repertoire as well, but it does not match Netflix’s collection of movies, TV-series and original content.

2.  In 2014, Amazon purchased Twitch, which lets users stream their video game sessions, for almost $1 billion. Why would Amazon spend so much money on Twitch?

 The main reason for the purchase of Twitch was to promote their new function Amazon Lumberyard, which is a service for helping game developers. Both Many companies see a lot of opportunities for growth and profits in the gaming industry. Both Amazon and Twitch offered tools to help developers include streaming capabilities straight into their apps, which means that game developers can include new tools that let players interact directly with stream-watching strangers and vice-versa.