Lei Shi

ITS 380

Chapter 10


Case Study Questions


1.      What are Three challenges that Netflix faces? The cost of content is very high, the risk of creating additional content, and it’s not unique and has many powerful competitors.

Firstly, one challenge is getting the technology that enables easy access to Netflix streaming service into the consoles and devices. Netflix has worked with various manufacturers to ensure the software needed is included. Secondly, Netflix is facing increased competition from other companies. Amazon prime in particular is continuing to increase the selection of its online streaming selection as it enters into more partnerships with movie studios. Thirdly, Netflix are beginning to produce their own TV programming.


2.      What are the key elements of Netflix’s strategy in 2014? It streamed content obligations to content producers.

(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

(4) Expand its offerings of high quality television series. 


3.      What are the implications of Netflix’s new strategy for the cable television systems like Comcast and TimeWarner? That they would be forced to fall back on their bundles and offer customers just the option to purchase the channels they actually watch.

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.


4.      What is Netflix in competition with Apple, Amazon, and Google, and what strengths does Netflix bring to the market? Netflix has lower profitability then its competitors, however it has a very successful streaming technology and stands out as a powerful Internet brand.

They are 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.




1.      What are the three dimensions in which the term “convergence” has been applied? What does each of these areas of convergence entail?

Technology, content, and the industry’s structure as a whole. Convergence from a technology perspective has to do with the development of hybrid devices that can combine the functionality of two or more existing media platforms, such as books, newspapers, television, movies, radio, and games, into a single device. There are three aspects to content convergence: design, production, and distribution.

5.      What techniques do music subscription services use to enforce DRM?

DRM is a combination of technical and legal means to protect digital content from unlimited production and distribution without the consent of content owners

10. How has the book publishing industry’s experience with the Internet differed from the newspaper and magazine industries’ experience?

While the Internet has not diminished TV viewing, it has transformed how, when, and where TV shows are watched. The living room where the TV used to be located is now a digital living room that moves along with the viewer from place to place. The Internet and the mobile platform have also changed the viewing experience. The best screen when commuting or traveling is the smartphone and tablet. More importantly, Internet-enabled social networks like Facebook and Twitter have made TV viewing a social experience shared among neighbors, friends, and colleagues. In the past, television was often a social event involving family and friends in the same room watching a single TV show.

15. What factors are needed to support successfully charging the consumer for online content?

 Online trading is touching its sky, not only in USA but in other developed and developing countries too. The online content market is also not an exception, as consumers are accepting, this way of buying content rigrously. There are many factors which are responsible for this contamination of content trading, but a contradiction occurs when it comes about comparing the free online content and the chargeable online content; some consumers believe that, why to pay for a content which is already available on various sites for free and some consumers are well verse about the pros of buying the required content online.



1. Identify a popular online magazine that also has an offline subscription or newsstand edition. What advantages (and disadvantages) does the online edition have when compared to the offline physical edition? Has technology platform, content design, or industry structure convergence occurred in the online magazine industry? Prepare a short report discussing this issue. The online magazine I look at was GameInformer. The advantages are you can get the magazine right away instead of waiting for it in the mail. You can view videos that are only posted on the online version for upcoming games and gameplay.

 Three online sources of content that exemplify the three digital content revenue models are Netflix (subscription), iTunes (a la carte), and Pandora (advertising-supported). Netflix is a video streaming service. The value to the consumer is access to older movies and TV shows, and some very popular original TV shows, on demand for a small monthly fee. iTunes primarily sells its content on an a la carte basis via individual downloads (it is also a cloud storage site), and sells more current movies and TV shows, and of course millions of individual single music titles. All sales are through an Apple account with a customer credit card. Pandora is mostly ad-supported (90% of revenues) and provides curated radio programs reflecting customer choice of singers and musicians. Service is free for 40 hours, and then a $36 per year subscription for unlimited listening. The future of each type of service is best approached by looking at what works now. Currently, iTunes is very profitable (although not as profitable as Apple’s physical device products), Netflix is marginally profitable, and Pandora loses money every year. While this could change in the next five years, prospects for Pandora appear limited. Student opinions will vary as to their own preferences for revenue, but they should explain why they prefer one model compared to another.