Netflix, Inc. appears to fit the marketing concept of marketing intermediary. According to our text, marketing intermediaries or resellers purchase products to resell at a profit (Peter and Donnelly 56). This company has agreements and contracts with video producers in an effort to obtain the latest movies and allow customers to either stream live and/or are able to receive the particular video at their residence. Companies such as Netflix, Inc. provide services to consumers by purchasing products and reselling them as services to wanting consumers. This is a great service for the price, Netflix provided me with easier access to all the top and old movies for my viewing for a reasonable prices.
For years Netflix has been entering into deals with electronics manufacturers such as Song and Samsung to include the Netflix software with their devices, allowing the end-users to access the Netflix streaming service. Netflix needs to foster the creation of technologies that allow fast and easy access to the Netflix streaming service, while providing high quality content. The second major challenge is the growth in competition in the video streaming market, Netflix is competing against Hulu, Amazons subscription service, HBO Now, Google Inc. and others to dominate the video streaming market, and, at the time of this case study, was winning the battle against the newcomers, but this lead would surely decrease as other streaming services entered into agreement with movie and television studios. The third challenge that Netflix is facing is getting involved in original programming, creating their own series and movies. Netflix has had quite a bit of success here with shows such as ‘House of Cards’ and ‘Marvel’s Daredevil’, but other video streaming suppliers have started to create and release unique content as well, and some of the major media companies are pushing back against the unique content on streaming services by removing their own content from those streaming services.
A mere decade and 4 million subscribers later, Netflix has taken on established video rental companies such as Blockbuster, Hollywood Video, and Wal-Mart and emerged as the leader in innovation and customer service. In addition to betting that the Internet would be the future of the video rental market, Hastings made a few other key predictions that helped him develop a
Netflix's initial pricing model was similar to traditional video stores, charging $4 per movie rented plus a $2 shipping and handling. Issue: What cost and price structure should Netflix adapt to meet customer's needs, and improve customer's satisfaction? Analyzing the Issue SWOT Analysis Strengths: 1) Movies Recommendation system to any user, creating a web portal rather than just a subscription service. 2) Offering unlimited rentals. 3) The shift to no-late fee subscription model, no due dates.
With firms like Netflix, there is an increasing amount of consumers who pay for a subscription and can stream movies directly to their TV, computer, tablet, or even cell phone. With this subscription, they can also get movies mailed to them via postal service. The price of these subscriptions is significantly cheaper and more convenient than renting a movie, and with Netflix, consumers don’t have to worry about late fees. Bargaining Power of Suppliers: The bargaining power of suppliers is pretty low. Suppliers only have power if they are the only one that carries a specific movie, and chances are, if the movie can’t be bought from one supplier, it can be found fairly easily from another.
The competitive forces that have challenged the movie industry are YouTube, google and other online sources where customers can download and watch movies/Television shows for free. The development of the movies and TV shows online has become a major problem for the movie/tv industry. YouTube, which started up in February 2005 quickly made the most popular video sharing website in the world with over 100 million views daily. Soon enough, video clips of copyrighted Hollywood movies and television escalated on YouTube. The media had to go through $1.25 billion in damage and lost battle.
Analysis We will use the S.W.O.T. analysis to begin address the issue and to indentify appropriate strategies for consideration. Strengths Companies Innovations: • Proprietary recommendation system- It’s the main source of sustainable competitive advantage of Netflix. The system provides value to the DVDs rentals by expanding and customizing the customer’s movie preferences. Knowing that one of the basic assumptions about market participants is goal-oriented behavior, where the users are interested in fulfilling their personal goal; this is a good call.
ANALYSIS Netflix, Redbox and Competitors Netflix is the world’s largest subscriptions service for streaming of online movies and TV episodes as well as sending DVD’s through mail. Redbox has over 22,000 kiosk locations within the continental United States and United Kingdom with DVD rentals and the cost of one dollar a day to its customers. New Entrants Ease of entrance is a main factor in the strength of both Redbox and Netflix, in the number of competitors, now with mostly online video streaming you only need computers, software and servers and distribution rights to enter the market. With more companies and competition Netflix and Redbox do not have to fight over customers. Buyer Bargaining Power The buyer bargaining power is increased with more entrance it is more likely that the consumer will have the choice to purchase a product with the lowest price.
The codecs encode the video while recording it. The encoded video may then be uploaded from the client system to the web server for a website such as YouTube to be shared with others (Exhibit 2). Streaming technologies like Adobe Flash, Apple QuickTime, and Microsoft Windows Media and Silverlight all include certain common components in their solutions. These include a player to play the media on the viewer's computer or mobile device, a defined file format or formats that the player will play, and often a server component that offers features like digital rights management and live streaming. All streaming technologies use compression to shrink the size of the audio and video files so they can be retrieved and played by remote viewers in real time.
Questions|Answers| What is meant by the term media convergence with regard to technology, and how has it affected everyday life? |The term convergence can have several different meanings but is defined in our text as " the flow of content across multiple media platforms, such as combining computers and telecommunications and turning them into electronic form. I think that media convergence has affected everyday life in many different ways, at one point we could only watch television shows and listen to music on our televisions and radio stations. Media convergence has now made it to where we can access our favorite shows online through websites such as youtube and even TV Station websites, you are also able to download music off the computer and watch videos through a variety of different sites as well. Not only has media convergence made it possible for us to access these things from a computer but we now have iPhones, iPads, Android phones and even email that allow us to search websites for news, music and television shows.