Case study Netflix
It has been found that the company Netflix obtain poor profitability due to the high price of the contents. In the application online streaming of the new series along with the old series both are offered to the customers at a same subscription cost. Huge subscription cost is not consumable for the people of different part of the world. Due to their affordability the income scope reduces and it lacks balance to develop the structural condition for effective business. However the owner of the old Hollywood cable TV charges for the movies that affects the revenue of Netflix. Challenges in revenue generation by the organisation has faced a huge fall in the year 2016 that make them to lose their entire profitability due to the content streaming obligation by the stakeholders. It has been found that Netflix is unable to create its original series due to huge expenditure on the hit shows and movies by Lionsgate, Paramount, MGM and Disney for licensed earning. However in the year 2017 Netflix invested for the original shows to make the archive attractive for the market. Hence, it reflects the challenge of low profitability in comparing to the fastest growth of business due to the huge investment (Papadas et al. 2019).
On the other hand the second issue of Netflix generated with the development of new content creation. It has been found that understanding about the demand of particular type of content influence an organisation to invest for such content. Lack of survey regarding the process generates challenge for Netflix to create their own content that can develop market for the originals. In the context of the profitability rate for the new TV series it becomes difficult for Netflix to identify the interest of the viewers towards the particular show. Whereas the old TV shows has already a viewer base that can be assessed by Netflix to calculate the customer traffic to view the series further to increase profitability. Hence, such forecasting challenge and mixed result of the customers. As Netflix is not comfortable to release its data regarding the performance identification it’s difficult to understand the profitability from the originals. However, the interest of the subscriber towards the streaming of Netflix and releasing of charged TV shows rather than the originals exhibits the challenge of the company for creating their own series.
The key elements of Netflix are at present day to become stronger in the international market to become an important pipeline to stream the videos and create new contents by their own to offer the loyal viewers to develop new aspect of the pipeline to share the content. However from the initial practice of Netflix it has been identified to the viewers as the server of branded shows of different channels hence the organisation concentrate on their demand of market to maintain the subscription and profitability as a key element to perform sustainable practice in the competitive market. On the other hand, Anwar et al. (2018) stated that by focusing of the customer demand strengthening the service can make an organisation to attract the profitability. In the current competitive environment Netflix streaming is depending for the profitability on the purchased contents from different renowned companies. Utilisation of the serving channel of Netflix is highly attractive to promote the interest of the profitability that can enhance the effectiveness to attract the customers of the particular demand.
In order to maintain the entire process of service of Netflix keeping good relationship with the TV series producers can help Netflix to stream the contents in a regular manner to obtain popularity. In this context Ko and Liu (2017) stated that good relationship helps to negotiate and potential outcome and satisfaction of the content producer enhance them to keep connected with Netflix for the sustainable popularity of their season to retain in the competitive environment of the organisation. The organisation has a reputation for the particular activity therefore; focusing on their demand can only become profitable to make them to move for their originals slowly to induce the interest of the customer and develop new attraction among them to fulfil the interest of Netflix to entre new market environment.
The social media and internet sharing of the features of Netflix allow them to compete with the cable TV industries that charges as per the inflation rate. Distribution channel of Netflix performs similarly as cable system that helps to reach them to the large number of national audience. Due to the price hike the cable industry offered the customers to select their channels not their shows whereas Netflix offers to opt the shows to the customers that increased the level of attraction towards the Netflix rather than the cable service. Thus it becomes a favourable scope for Netflix to challenge the cable TV by their own originals that can meet up the demand of customers for watching TV. Such mixing of TV drama, documentaries and comedy together develops a complete version in Netflix through their new strategy implementation apart from buying the licensed version of the contents from the other brands. In this context Salunke et al. (2019) mentioned that popularity of a brand in the market generate by the fulfilment the demand of the customers in a cost effective manner. The cable television system Comcast has a number of attractive features such as on demand high definition programs, high speed internet through residential broadband and recording facility of the program.
Cable TV does not have their own production hence no proper determination and variety of show make the customer confuse to take decision about channels. However in Netflix the recommendations along with the review of the series and program make the customers to take decision without wasting their time. Variety of options in the particular cable TV service provider attracts the customers however, comparing with Netflix it is only the pipeline whereas Netflix started to offer the customers it’s originals that becomes a special attraction for the consideration of Netflix. Strategy of an organisation with innovative idea application induces the significance for the beneficial outcome to achieve success. The cable TV service process of Comcast is unable to serve exclusive sessions hence the attraction of the customers moved for the Netflix. Moreover, the rate of subscription was also a competitive factor to attract the market by Netflix.
Netflix has two effective competitors: Apple and Amazon due to their attractive offers. Apple offers customers free movies download instead of taking in rent. Additionally, the iTunes option of Apple influences the customers to purchase music, TV series and videos. Effective connectivity between HBO and Netflix attract the customers by offering the huge successful series by streaming them in the channel those are made of creativity by the team of producer, director and editors. It can give a tough competition with Apple due to the interest shifting of the customers from general download of movies rather than the worldwide famous TV series. The performance and objectives of business of Netflix influences other companies like Apple and Amazon to develop their own environment in the online streaming market. Competition between the new content and talent makes Netflix to attract their customers (de Guimarães et al. 2018). However, the competition regarding the costing of the subscription becomes critical for Netflix to attract customers comparing to the service of Amazon. Free streaming offering of videos for the Amazon prime customers that attracts more customers to shift their subscription from Netflix to Amazon.
Streaming HBO without additional fees attracts the customers to obtain cost effective service of Amazon. Emmy award winning series of Amazon becomes a motivating factor that generates the interest among the customers to try the originals series for the fulfilment of the entertainment need by upgraded quality. Moreover, the strategic practice of Apple allow them to generate their revenue 30 times more than Netflix and hence the shareholders also feel to shift their interest that takes place for the competitive environment development from the aspect of affordability of the customers worldwide. Innovation in the production and identification of the trend before selection of the production makes Amazon is more prominent than that of Netflix (Krishnaswamy, 2017).
It generates more capability for Amazon to develop their potentiality to serve the customers for competitive advantage in the international market. Different kinds of offerings along with the cost effective rate and reputation are vital factors. Moreover, the accessibility of Apple and Amazon attracts customers to promote their interest by considering their need and affordability which is not considered by Netflix. Hence, comparing to the acceptance of Netflix, regional attraction has been generated by the implementation of the service by Apple and Amazon to the potential customers for web series along with popular movies and seasons of renowned television channels. Therefore, as per the report from the case study revenue generation in Amazon and Apple shows the competitive advantage for both the companies (Nan and Tanriverdi, 2017).