ITS 380-001 Global E-Commerce Systems

Xueying Mei

CH10 – Online Content and Media


P.725   Case Study Questions:

Q1: What are three challenges that Netflix faces?


Netflix is a world beater in the entertainment industry. Ever since its formation in 1997, Netflix has changed the entertainment industry with the quality of services it offers to its customers. Netflix majors in the provision of video-on-demand and streaming media. It does this through DVD by mail and also through the internet. Netflix has also taken the TV and film production industry by storm since its entry into the sector in 2013.


The content challenge: This is the major challenge for Netflix to acquire market regional content is one of the important factors to add in. Because for limited content library, users are not willing to pay higher subscription.

The pricing challenge: Another important challenge for Netflix to setting a price considering the average annual income of the country.

The Infrastructure Challenge: The lack of speedy internet across the globe poses yet another challenge for Netflix, especially in developing markets.


Q2: What are the key elements of Netflix's strategy today?


·         The first one is that Netflix have to strike good deals with Comcast and other Internet service provider to develop high speed internet service to its customers in order to stay on top of the game.

·         Secondly, Netflix has made it one of their strategies to develop and producing their own content in an attempt to decrease the cost of content. However, the capital investment for developing your own content is very high, but it can prove too profitable in the long run as they don’t have to pay any royalties to an external party.

·         Thirdly, Netflix needs to keep expand their service in new countries where there are opportunities for growth and increased profits.

·         Lastly, Netflix are trying to expand their offerings of high-quality TV series to catch new customers.


Q3: Why is Netflix in competition with Apple, Amazon, HBO, and Google, and what strengths does Netflix bring to the market?


I think a better way to think about the first question is “Why are Apple, Amazon, and Google wanting to compete with Netflix?” After all, Netflix was in the subscription movie and TV entertainment business, even when they were merely content aggregators, since 2000.

All three (Apple, Amazon, Google) want a piece of the multi-billion dollar entertainment industry. With the advent of streaming the barrier to entry was lowered at same time as they had either built up huge war chests or, in the case of Amazon, ran at a loss to finance growth. Amazon is particularly interesting as it is a value-add to their massively successful Prime program that continues to bring revenue and expand their customer base.

As for what strengths does Netflix bring? Well, for one they have well over a decade of using data. At first it was to make highly relevant recommendations (most of the time). But with the advent of streaming they gained a direct pipeline into how members actually consumer content. That data is now used to inform how they think about creating original content. Combine that with a well-honed high-performance culture wherein they “hire the best, pay them top of market, and let them do their best work” which also extends to the creatives who make the originals, and you have a pretty good idea of why Netflix, thus far, has been so strong in the streaming entertainment space.


P.727-728   Projects:

Q3: 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?


Amazon, Videocond2h, Google are three good examples for using digital content revenue model

A cable TV network can employ all these 3 types digital content model. First, they generate revenue by TV channel subscription offering normal HDD or archive content

Second, they also allow customers A La carte package that is giving the customer to choose the type of channel they wish to see and charge them for only those selected instead of a general package with a standard price this customization of channel fixing allows customer freedom to pay by choice

Third, they also run shopping channels on their plat forms like shop best, these advertisers are online sellers and on order they deliver the product these are virtual stores o the shoe at real time but products physically delivered on order either by tele-shopping or by mail order method

These sites provide value to customer; example as below:

Amazon sells both physical and digital content through its library for products like Books and holly wood movies on pay per item method and earns revenue

VideoconD2h sells the TV channels on bunched as well as on a a la carte model by allowing customization ie. customer choose channels as per his interest and pay for the specific chosen only and this is giving good revenue

there is also Google which makes the revenue from running advertisements and also on pay per digital content there products like mails subscription to private business and there product like you tube are just 2 examples that GOOGLE earns from all three models of digital content sales

I prefer the example of Google which has developed a well-developed network as well wide data content for sale and earn revenue in all three models of digital content revenue.


Q4: Together with a teammate, investigate the use of mobile apps in the online retail or financial services industries. Prepare a short joint presentation on your findings.


Perhaps the best place for students to start is to identify newsstand magazines first, and then find their online counterparts. Many online magazines have a free first month offer. The online editions will likely have video, music, and interactive elements that users find captivating and entertaining. The online photography is also excellent but perhaps not quite up to the level of physical print magazines. There are few advantages for the newsstand versions of magazines, except for the physical look and feel of turning pages. With respect to convergence, until recently, there had been very little convergence in the online magazine industry. This is changing, especially in the fashion industry as fashion Web sites take on many of the features of slick fashion magazines ( Content convergence in the areas of creation, production, and distribution has begun to occur. Online editions of national news magazines increasingly use streaming video, social network links, and user comments ( Newsweek has merged with the Daily Beast and no longer publishes a print version. Many magazines now have e-reader editions or apps that enable magazines to be read on smartphones and tablet computers such as the iPad. In some instances, the print versions of magazines have disappeared entirely, and now only a Web-based version is available. The Web and e-readers have created the opportunity to leverage print content to the different distributions channel. Increasingly, magazines are developing online content developers, as well as leveraging their star reporters. Industry structure convergence has not occurred, although in the early days of e-commerce it was believed that an entirely new set of online zines would rise to challenge the old giants.