Netflix Case Study

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Q 1. What forces are driving change in the movie rental industry? Are the combined impacts of these driving forces likely to be favorable or unfavorable in term of their effects on competitive intensity and future industry profitability? A 1. • Change in prices – consumers in this segment are very sensitive to price change. Streaming online is convenient and relatively cheaper than paying for cable services; however, if for some reason the prices of internet services or relevant products would go up, this change would be unfavorable for Netflix. For past decade, there was a shift in TV industry where prices dropped for TVs and the quality has improved greatly. Smart TVs overtook the market, which had a favorable effect on online streaming. As a result, consumers are more likely to spend on a good quality rental services that provide newest on-demand movies. • Change in technology – as I mentioned before, smart TVs are one of the favorable technological shifts that helped movie rental industry to gain bigger market share. Companies that provide high-speed Internet services are also key players because their product affects the demand for online movie streaming. These technological changes and many other innovations helped movie rental industry to prosper but there might be other innovations that could impact companies like Netflix. Continuous research and development is the key to changes in technology and Netflix has to stay on top of it all. Q 2. Complete a strategic group map. What does your strategic group map of this industry look like? How attractively is Netflix positioned on the map? Why? A 2. • I chose to create the map using the product offerings and the price for the services in order to compare the movie rental industry. As shown on the map, Netflix is relatively in a good position since it does have more of the movies/shows to offer for its

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