Case Study Questions
1) What are three challenges that Netflix faces?
The cost of content is very high and growing faster than revenues. The risk of creating new popular content is high. Netflix has limited experience creating content. Netflix has very powerful competitors, both in technology (Google and Apple) and content creation (HBO) and content distribution (Amazon).
2) What are the key elements of Netflix’s strategy in 2015?
The elements of Netflix strategy are (1) strike deals with Comcast and other ISPs to develop high speed Internet service to its customers, (2) reduce content costs by producing their own content, (3) expand offshore where opportunities for growth are higher than the United States, and. (4) expand its offerings of high quality television series.
3) What are the implications of Netflix new strategy for the cable television systems like Comcast and Time Warner?
The success of Netflix in developing original content, and having access to a different distribution medium (the Internet) is a direct threat to cable television providers because Netflix will not require customers to buy a bundle of TV shows, but instead will stream individual shows on a demand basis, with payment in the form of a modest monthly fee.
4) Why is Netflix in competition with Apple, Amazon, and Google, and what strengths does Netflix bring to the market?
Apple, Amazon, and Google all provide substitute products and services by providing Internet consumers access to movies. The strengths of Netflix are its differentiating factors like brand recognition, algorithms to help consumers find movies and TV shows, and a growing list of production studios supplying it with original content. Competitors could develop these attributes as well, but only with considerable effort, expense, and time.