Submitted on 2/26/18
Chapter 10 – Online Content and Media
C A S E S T U D Y Q U E S T I O N S
1. What are the three challenges that Netflix faces?
One of the problems is that the cost of its service is very high, and it is increasing faster than Netflix’s revenues. Other problem is that Netflix does not create too much content and does not have too much experience about it. Even though, they have recently started to introduce some series under the denomination “Netflix Original”, most of its content, and the most popular, come from different content providers. Lastly, there are an increasing number of competitors with more powerful technology like Apple, HBO, etc.
2. What are the key elements of Netflix’s strategy in 2014?
Close deals with Internet providers in order to offer a quality service without interruptions to its customers, reduce the cost of the service by creating its own content, expands its market outside the United States, and include popular TV shows.
3. What are the implications of Netflix’s new strategy for the cable television systems like Comcast and TimeWarner?
Netflix users do not required a TV contract, the only thing they are required to have in order to use the service is an Internet connection.
This allows the client to save the price of the TV bundle cost and pay a monthly fee to stream the content that he/she wants to stream at any moment.
4. Why is Netflix in competition with Apple, Amazon, and Google, and what strengths does Netflix bring to the market?
Netflix competes with these companies because they all offer a similar streaming service.
The strengths of Netflix include its brand recognition, the diversity of its content, and their recommendation algorithms.
P R O J E C T S
2. Go to Amazon and explore the different digital 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.
Amazon sells three types of main digital media: music, video, and e-books. In music and video, it has both a la carte purchase of physical products (CDs and DVDs), a la carte downloads of single tunes or shows, and also streaming of music and some videos. It sells e-books only for its proprietary Kindle platform.
Amazon’s physical products business has largely destroyed record stores and music rental stores. Its impact on movie DVD sales has supported the Hollywood model based on the high profits of DVDs. Its streaming video service involves mostly older titles and television shows, and supports revenue to the movie industry for its backlist of older titles, which are too old for cable.
5. In August 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.
Amazon bought a streaming company that ranks fourth regarding Internet traffic after Netflix, Google, and Apple.
It is a good investment that a company like Amazon will know how to make profit from it. Furthermore, the video games industry, and specially the streaming of them, is rapidly increasing, so this was a good strategic move from that point of view. In addition, Amazon reaches a new huge market. It acquires 55 million young and wealthy users that are passionate about new technologies.
Also, it a defensive move against other competitors. Any other competitor could have bought Twitch, and gained a competitive advantage from it.