CH 10 Online Content and Media
1. What are three challenges that Netflix faces?
One of the challenges that Netflix faces is poor profitability. The cost of old and new content is very high. The owners of older TV series and movies charge Netflix to distribute the content, so Netflix was forces to raise subscription prices in order to make some profit. Second challenge is that Netflix creates its own content and that can be very risky. Netflix tried using algorithms to predict what tv shows people might be interested in watching. The thirds challenge is growth of competitors. Some of Netflix’s biggest competitors are HBO, Amazon, Apple and HULU, therefore Netflix is forces to compete for prices and content.
2. What are the key elements of Netflix’s strategy today?
Netflix has to provide exclusive content in order to keep customers loyal. Netflix buys rights from owners of old movies and series in order to distribute them for subscribers. Netflix makes deals with Hollywood movie producers to become their distributors after few months their theater run which puts them in competition with other major cable networks. Also, Netflix attempts to create their own shows and movies in order to attract more customers. Netflix expands their services outside the US to many countries which gives them a lot of advantage.
3. Why is Netflix in competition with Apple, Amazon, HBO, and Google, and what strengths does Netflix bring to the market?
Apple, Amazon, HBO and Google, all offer streaming services similar to Netflix. All of those companies have capital to purchase competitive content for distribution. Amazon offers free video streaming services to their Prime members which gives them a big advantage over Netflix. Apple own the biggest media store and is leader in downloaded movies. One of Netflix’s strengths is their recommendation algorithm that offers customers movies or shows based on what they watched. Also, Netflix allows multiple accesses, depending on subscription pan, to content from one account.
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Question 2: 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. Prepare a presentation to convey your findings to the class.
Question 5: 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? Create a short presentation either defending the purchase or explaining why you think it was a bad idea.