ITS – 380
Chapter Online Content and Media
Case Study Questions:
1. What are three challenges that Netflix faces?
- Netflix faces a couple key challenges in there fight to be number 1. Netflix already deals with the high cost to produce content and it has many powerful competitors. The first major challenge Netflix faces with is that it is very difficult to get the technology required for Netflix to run onto devices/ consuls. The second challenge is that to set themselves apart Netflix is creating original content. Creating new content is very risky and these series could fail. And Lastly, Netflix is having major competition enter the market. Such as Amazon, Apple, and Google. The Latest one to enter the market is Disney. With all these challenges facing Netflix, they have an uphill battle to fight!
2. What are the key elements of Netflix’s strategy today?
- Netflix’s key elements in their strategy today include striking major deals with Comcast and other ISP’s to develop high speed internet service, reduce content cost by creating originals, expand to other markets where growth rates are higher, and to expand its offerings of high quality television series.
3. Why is Netflix in competition with Apple, Amazon, HBO, and Google, and what strengthens does Netflix bring to the market?
- Netflix is in competition with Apple, Amazon, HBO, and Google because they are all offering a similar service. “on-demand”, “no commercials”, “High quality” tv series on their on streaming platform. Netflix stands out for a few reasons, they have brand recognition, a growing list of productions, and algorithms that allow their users to be tailored to. These features are unique because in order to copy them, it would take billions of dollars and a lot of time and effort.
1. Identify three online sources of content that exemplifies one of the three digital content revenue models. (Subscription, A LA carte, and advertising supported). Describe each site, how it provides value, and which type of revenue model do you prefer and why?
- There are many sources of content that follow the three revenue models.
o Netflix-Netflix is a subscription based revenue model because it requires its users to pay a monthly fee in order to have access to the content. It provides major value by offering a wide variety of shows, as well as customizing top picks for you.
o Direct TV- Direct Tv is an a La carte because it allows it users to only pay for what channels the are looking to receive. It provides value by allowing the user to customize the tv channels they actually want.
o Twitch- Twitch is an advertised supported planform. It allows users to watch for free but it will run ads every so often to help pay the content creators and to produce revenue. This provides value because it allows everyone to have access.
Overall, I prefer a subscription based revenue model for a few reasons. One reason I prefer subscription based revenue model is due to the consistency of the revenue. The other reason I prefer a subscription based model is because I don’t have to watch ads.
2. In 2014, Amazon bought Twitch for almost 1 billion dollars. Why would Amazon spend so much money on Twitch?
- Amazon bought Twitch for almost a billion dollars because they saw Twitch as an asset to them. With video games on the rise, Amazon saw the market for Twitch to grow. It only made sense for Amazon to buy Twitch because Amazon is on the forefront of technology and Twitch allowed Amazon to break into a new complimentary market. The other reason for this acquisition is to bring stability to Amazons subscription based revenue model. Twitch is a advertised and subscription based model that allows for amazon to have multiple sources of revenue.
Overall, the acquisition did exactly what Amazon wanted it to do. They bought it to break into a new and exploding market and it worked! They brought E- sports to a new level and it kept Amazon on the forefront of technology.