Netflix Analysis
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Kenyatta University School of Economics *
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Information Systems
Date
Nov 24, 2024
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pptx
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A Netflix Analysis
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About Netflix
Netflix is a global online streaming platform
It offers a wide range of contents ranging from series, movies, documentaries.
Netflix invests heavily in producing original movies and series.
The platform boasts a simple and personalized interface with tailored recommendations.
Operating in numerous countries, Netflix has a broad international reach.
Netflix leads in streaming technology, adapting to various devices and internet speeds.
It competes with various streaming services, traditional networks, and emerging platforms.
History of Netflix
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Netflix Leadership
Netflix was founded by Reed Hastings and Marc Randolph.
Reed Hastings
Reed Hastings is an American entrepreneur and philanthropist. He co-founded Netflix and served as its CEO for many years. Hastings played a crucial role in the company's transformation from a DVD rental-by-mail service to a global streaming powerhouse. Known for his strategic vision, Hastings has been instrumental in shaping the landscape of digital entertainment.
Marc Randolph
Marc Randolph, born on April 29, 1958, is an American tech entrepreneur. He co-founded Netflix alongside Reed Hastings and served as its first CEO. Randolph was involved in the early development of Netflix's business model, including the transition from DVD rentals to streaming. His entrepreneurial insights and contributions were foundational to Netflix's initial success and evolution.
Netflix Performance Metrics
Subscribers: 247.2 million paid
As at October 19, 2023
Profits: $8.54 Billion
As at June 2023
Number of Fulltime Employees:
12,800
Netflix Profitability
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Customer Satisfaction
Netflix Blue Ocean Strategy
Eliminate
Stores
DVDs
Storage Capacity
Raise
Comfort Watching
Easy Payment Method
Reduce
License Fees
Subscription Fees
Create
Unlimited Number of Content to Watch
Netflix Competition
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Hofstede's 6 cultural analysis of Netflix
1.
Power Distance:
Netflix appears to reflect lower power distance, as it embraces a decentralized organizational structure. 2.
Individualism vs. Collectivism:
Netflix, as a company rooted in innovation and individual creativity, aligns with cultures emphasizing individualism. 3.
Masculinity vs. Femininity:
Netflix's content strategy reflects a balance between masculinity and femininity. 4.
Uncertainty Avoidance:
Netflix's approach to uncertainty avoidance is flexible and adaptive. 5.
Long-Term Orientation vs. Short-Term Normative Orientation:
Netflix's focus on original content production and long-term subscriber growth indicates a tendency towards a long-
term orientation. 6.
Indulgence vs. Restraint:
Netflix's emphasis on diverse and often indulgent content, ranging from high-budget productions to niche genres, suggests a leaning toward indulgence.
Porters’ 5
Threat of New Entrants:
Moderate:
The streaming industry has high entry barriers due to the need for significant capital investment in content creation, technology, and global infrastructure. Established platforms like Netflix have a vast content library and a large subscriber base, making it challenging for new entrants to compete on a similar scale.
Bargaining Power of Buyers (Customers):
Moderate:
While customers have multiple streaming options, the low cost of switching between platforms and the abundance of choices give them some bargaining power. However, Netflix's extensive original content and personalized recommendations contribute to customer loyalty, mitigating this power to some extent.
Porters’ 5
Bargaining Power of Suppliers (Content Providers):
High:
Content providers hold a considerable amount of bargaining power, especially for popular and exclusive content. As the streaming market becomes more competitive, securing rights to attractive content involves significant negotiation. Netflix, being a major player, has negotiating power, but costs may rise with the demand for exclusive content.
Threat of Substitutes:
Moderate:
The threat of substitutes is relatively low as traditional TV and movie consumption methods decline. However, other streaming services, cable TV, and emerging technologies could pose moderate threats. Netflix's original content and diversified library help mitigate this threat.
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Porter’s 5
Intensity of Competitive Rivalry:
•
High:
The streaming industry is intensely competitive, with platforms like Amazon Prime Video, Hulu, Disney Plus, and others vying for market share. Competition is based on content quality, pricing, and user experience. Netflix's global presence and vast library position it as a leader, but the constant innovation and aggressive strategies of competitors contribute to high rivalry.
SWOT ANALYSIS
Strengths and Weaknesses
1.Global Reach:
Netflix has a vast international presence, operating in over 190 countries, which gives it a significant global market share.
2.Original Content Production:
The company's strategic focus on producing original content (Netflix Originals) has not only won critical acclaim but also contributed to subscriber retention and acquisition.
3.Technology and Innovation:
Netflix has been at the forefront of technological advancements in streaming services, introducing features like adaptive streaming, personalized recommendations, and high-quality video streaming.
4.User-Friendly Interface:
The platform offers an intuitive and user-
friendly interface, making it easy for subscribers to navigate and discover content
Weaknesses:
1.High Production Costs:
The investment in original content comes with high production costs, impacting the company's overall expenses and requiring continuous financial commitments.
2.Content Library Rotation:
Licensing agreements for third-
party content can be volatile, leading to the removal and addition of titles. This rotation can affect user satisfaction when favorite shows or movies are removed.
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Opportunities and Threats Opportunities:
1.International Expansion:
Further expansion into untapped international markets presents a significant growth opportunity, especially in regions with a growing demand for streaming services.
2.Partnerships and Collaborations:
Collaborations with other content providers or technology companies could enhance Netflix's content library or improve the platform's features, fostering innovation and growth.
3.Diversification of Content Genres:
Expanding the diversity of content genres can attract a broader audience, capturing niche markets and catering to varied cultural preferences.
Threats:
1.Intense Competition:
The streaming industry is highly competitive, with the emergence of new platforms and the entry of established players. Increased competition poses a threat to Netflix's market share.
2.Changing Consumer Preferences:
Shifts in consumer preferences or behaviors, such as the desire for different types of content or alternative viewing platforms, could impact subscriber numbers.
3.Content Acquisition Costs:
The rising costs of acquiring or producing exclusive content, coupled with the need to continually invest in technological upgrades, can strain the company's financial resources.
4.Regulatory Challenges:
Evolving regulations and content restrictions in different regions could pose challenges, requiring Netflix to navigate diverse legal landscapes.