Undral Naran

ITS 380 Global E- Commerce

Chapter 10


Case Study Questions


1.   What are three challenges that Netflix faces?

Netflix experiences poor profitability due to high cost of content that is new production or old content.

          Second challenge they face is the risk of creating new contents. Even though they have their own data about what audiences watch, it is still uncertain risk to produce new content.

          The third one is its competitors. Netflix doesn’t have unique technology. The streaming technology is widespread and well understood. Apple, Google and Amazon have come up with their own version of video streaming services on subscription model. It might be easier for their customers to use those services instead of Netflix. Also these competitors have far large capital than Netflix since Netflix suffer from low revenue percentage. Major cable TV’s also started their own subscription services.


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

Netflix is working towards gaining 100 million subscribers by 2017. They are trying to expand their subscription through world- wide service not just North America. They keep acquiring rights to streams contents produced by others while they produce their own contents.


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

I think the first thing these cable companies should consider is their pricing. Cable pricing is too high and consumers are becoming less likely to pay high prices when they are offered cheaper but rigorous services like Netflix and even free YouTube streaming.


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

Because Apple, Amazon and Google all have their own streaming services now. They sell digital content and they also have subscription services like Netflix. Furthermore, these big giants have far more money to invest or do something new than Netflix since Netflix’s revenue is only 2% margin. However, Netflix has already large customer base and database established from it, the information is priceless. Now even Netflix is world- wide except China, it brings other company to expand their service in order to compete with Netflix. 




1.   Identify three online sources of content that exemplify one of the three digital content revenue models (subscription, a la carte, and advertising-supported) discussed in the chapter. Describe how each site works, and how it generates revenue. Describe how each site provides value to the consumer. Which type of revenue model do you prefer, and why?

a.    Subscription: Hulu    

Hulu is digital content streaming service based on subscription model. They work exactly like Netflix. However, they are successfully growing company. They recently started offering bundle that costs $4.99 to students. In this bundle, student subscribers get Hulu and Sp otify together without additional charge.

b.   Advertising- Supported: YouTube       

YouTube is kind of hybrid between subscription and ad- supported service. Everyone can go search and watch video on YouTube for free but YouTube places ads between videos. And that is how they profit. On the other hand, YouTube has started offering their subscription service YouTube Red. With this subscription service, viewers don’t experience any ad pause while watching videos. And they also be able to watch some YouTube original contents.

c.    A La Carte: Sling TV       

They offer 3 different bundles each consists of curated cable channels. Some people want cable TV but they watch only few popular channels and they don’t want to pay high process. For these people, a la carte service is perfect because they offer fewer cable channels for less price. Sling offers 25 channels for @20 a month, 40 channels for $25 and 50 channels for $40 a month.

          For now as a college student, I enjoy both Netflix and YouTube. Since I don’t have a lot of time to watch TV, I rather watch contents I want whenever I have time. I don’t want to commit to any coble service for the moment.


2.   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.

I found National Geographic magazine that both available in print and in digital form. They offer their online digital subscription through their own website and on Amazon. Online edition is cheaper at $12 while physical edition is $19. The digital form is compatible on iPads, amazon Kindles, iPhones, Android phones and Google Play. I think online version is much more convenient. The readers doesn’t have to carry additional paper with them instead, they can just browse to the subscription website from anywhere using whatever device they have. Also the delivery of the content is instant compared to physical print. It might take few day to few weeks to deliver the magazine depending on where you are.