Netflix is an American media services provider, founded in 1997 by Reed Hastings and Marc Randolph.
The company’s headquarters are located in Los Gatos California.
It originally confined itself to streaming media online and providing DVDs for both sale and rent, it has now expanded into show and film production.
Revenue in 2017 ($11.6 billion)
Netflix has a reasonably large customer base(130 million to be precise including 76 million from the United States).
Very low price($7.99) considering the amount of movies and shows availabe.
While Netflix recently lost Viacom(American multinational mass media conglomerate with interests primarily in film and television) content, it will soon be replaced with content from Disney which will include George Lucas’ beloved “Star Wars” franchise. Also, Netflix has sponsored an exclusive window on some pretty good shows, including its hit original production “House of Cards.”
Original shows and films such as 13 reasons why, Stranger things, Orange is the new black and Lucifer that cannot be streamed anywhere other than Netflix itself, this encourages more people to subscribe to the service.
The brand name NETFLIX itself is a strength because it’s known worldwide with a positive reputation.
You can use Netflix anywhere and anytime you desire.
Provides offers!!
Example:
You can make a family account supposedly Available over multiple platforms:
iPhones ,Androids, TVs, Playstation and Xbox
Original content is super expensive (costing the business 7-8 billion a year),considering the price for one person to subscribe, releasing original content will decrease the profit the company gains way more than it would’ve been without the original content, to prove this, here’s a bar chart of the revenue and the cost of revenue for 2016 &17
Lack of rights to original content – Unlike many traditional television studios, Netflix does not own most of their original programming. Due to this, usually rights expire after a year and the original content can be shown on rival services .
Amount of money spent on licensing new content far outruns streaming costs, as I stated earlier this will decrease capital
The more Netflix invests on original content, the less overall content in it’s library
Netflix has been ranked D in terms of environmental awareness. This has garnered bad publicity for the company as rival competitors Amazon and Facebook use over 40% renewable energy with their services.
The company has not being able to tackle the challenges present by the new entrants in the segment and has lost small market share in the niche categories. Netflix has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
International expansion: Beginning solely in the U.S., Netflix is currently available in Canada, England, Netherlands, Scandanavia and much of Latin America. Netflix will continue to invest in new territories.
Raising capital: With people willing to pay this much for Netflix stock, the company might do well to sell more shares. This might be a good move even if it dilutes the holdings of existing shareholders.
Advertising: I’m not necessarily talking about in show advertising like Hulu (another movie streaming website) uses, as that likely wouldn’t go over well. Netflix could use a lot of the white space on its website for banners of products that would be synergistic with its business, however. Examples would be Internet-ready TVs such as Samsung smart TVs also Google’s Chromecast device, Apple TV or any other synergistic technologies. This would be a painless way for the company to increase revenues.
The only threat Netflix is facing at the moment is competition from several companies.
Example:
Amazon:
Amazon has introduced something new called Amazon prime and is slowly becoming the main supplier of videos on demand in the USA ,on the plus side subscribing to Amazon prime costs almost double that of Netflix. An account on Amazon Prime provides not only the ability to watch videos, but also additional services, such as access to the music library, free express shipping and access to rental e-books
Hulu:
This website has rights to some of the most famous TV shows to ever exist for instance Southpark
The biggest difference in the business model between Hulu and Netflix/Amazon is that on Hulu, even subscribers see ads. Moreover, the cost of subscription is roughly the same, at $8. Hulu does have the option of an ad-free option, but here the subscription price rises to $11.99.
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