How Netflix Can Increase Value and Variety Through Interactive Content and Cloud Streaming
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Netflix was founded in 1997 and has grown to 48 million members in 40 countries. It aims to become the best global entertainment distribution service by licensing content worldwide and helping creators find audiences. While it faces threats from competitors like Hulu and technical issues, Netflix can address weaknesses by offering more interactive content, innovating its cloud technology, growing strategic partnerships, and improving marketing. Recommendations include expanding into interactive video, games, and live sports to add value; using cloud storage to stream live and solve capacity issues; and building partnerships internationally to overcome legal barriers.
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How Netflix Can Increase Value and Variety Through Interactive Content and Cloud Streaming
- 1. NETFLIX PAULINA JASWIEC MBA 555 BUSINESS STRATEGY
- 2. COMPANY INTRODUCTION Founded in 1997 Movie and TV series network 48 million members 40 countries all enjoying… 1 billion hours of TV shows and movies per month, including original series
- 3. VISION Becoming the best global entertainment distribution service licensing entertainment content around the world creating markets that are accessible to film makers helping content creators around the world to find a global audience
- 4. COMPANY PRESS RELEASE Competitor- Hulu, (later) HBO Goal: • stick to commercial free • limited subscription TV “Internet TV replace linear TV”: • Apps will replace: channel, remote control, screens will proliferate
- 5. SWOT ANALYSIS STRENGTH • Brand name (48 mil) • Own original series • Good delivery platform system • Low monthly cost for unlimited at 7.99 per month OPPORTUNITIES • Innovation to cloud • Online game streaming • Marketing/Advertising WEAKNESS • Take debt to fund extreme content licensing • Technical errors • User accessibility • Not available in Europe and other countries due to legal issues THREATS • Illegal downloading • Competitors • Content pricing
- 6. DEMAND IS…..
- 7. SUPPLY IS… What is happening?
- 8. RELEVANT DETAILS Why company is struggling? • Variety in content • Streamlining and technical issues • (not made for the future) • Threat from competitors and acquisitions • (Apple and Comcast join hands) • Poor Marketing • Barrier to entry • (Samsung TV app) • Price increasing What is the company future?
- 9. RECOMMENDATIONS Relevant detail Recommendation 1. Variety in Content Interactive video and games, music videos according to preference, sporting events, progress with own series 2. Innovation & Technical Issues Stream live and store in cloud 3. Threat from Competitors Grow allies and follow trends 4. Poor Visibility Marketing & Branding 5. Barrier to Entry Stronger partnership, forming alliances, (e.g Samsung TV)
- 10. REASONS FOR RECOMMENDATION VALUE & VARIETY Create Value with Marketing & Services = Customers retention 1. Interactive video and games 2. Music videos (according to preference) 3. Sporting events 4. Progress with own series 5. Add original content that reached to demographics (interest, age, language) Need to keep adding value
- 11. Cloud & Technical advancement = market leader 1. Stream live and store in cloud (keep up with the potential numbers of customers) 2. Rent a box- console system (independent of a computer- solve wireless system) 3. To create a true home entertainment systems 4. Become interactive (location, store) REASONS FOR RECOMMENDATION INNOVATION & TECHNOLOGY
- 12. Barrier to entry by building partnerships + alliances 1. Legality issues- local networks (offering individual brands- to support different languages) 2. Anti Pirating Organizations (work with to help promote digital media the legal way) 3. Continue to work on International copyright laws= stream work wide 4. Incorporating more service into one REASONS FOR RECOMMENDATION INTERNATIONAL STRATEGY
- 13. THANK YOU
Notas do Editor
- Question to audience : How many of you have downloaded movies illegally?
- With 30 million customers worldwide and accessibility in over 40 countries, many would believe that Netflix is a company which is not experiencing any losses or threats within their company. However, while Netflix has done many things right in the past such as being ahead of the trend of online streaming, the company is still not quite hitting the mark in all areas of their business. Important aspects of the online streaming market have been overlooked which has left Netflix vulnerable to outside attack from their competitors and has weakened the overall company structure.
- Having a variety of content within their product is an aspect in which Netflix is currently suffering in. While they offer a wide variety of TV shows and movies, they do not currently offer any music options such as concerts, music videos, or music channels. In addition, they also don’t offer any sporting events or news broadcasts. Movies and television shows appeal to a specific audience and not including music, sports, and news, greatly diminishes the potential market which Netflix could attract by having a more diverse online content. Technical issues and having a more streamlined process is another area where Netflix needs improvement in order to stay ahead of the game and remain on top of the online streaming market. Technical issues is a major reason why Netflix continues to lose customers. Slow downloading speed, errors in downloading, and pausing while watching all affects the customer quality and satisfaction of the product. Having over 30 million customers watching their content creates a problem for Netflix as they are currently not able to handle such a large demand at one time which leads to problems in their server. In addition, not having a more streamlined process such as offering cloud services which do not require the internet lead to a lower customer satisfaction rating and can create problems for Netflix in the long-term future. Another reason why Netflix is struggling is due to the large threat from their competitors. Online streaming is becoming increasingly popular which leads to more competitors on the market. Some of Netflix’s major competitors are Apple, Amazon, Hulu, and other online streaming servers. An even bigger threat is the possibility of Apple and Comcast partnering together to offer a complete online streaming product. Apple is one of the most popular brands in the US and Comcast is a Cable network provider. One of Netflix’s biggest obstacles is the high costs of licensing when acquiring content for their platform. Comcast has many partnerships within the media industry which could lead to lower licensing costs for Comcast and Apple, therefore giving them a competitive advantage over Netflix. Poor marketing choices and increases in prices are two other areas which are hurting Netflix and the Netflix brand. While Netflix offers an ad-free online streaming system, the Netflix company itself does not have many advertisements present leading to a low overall consumer awareness about the product. Netflix does not frequently produce television commercials, online advertisements, or newspaper advertisements and this lack of awareness can be seen to hurt Netflix and slow the growth of the company. Increasing prices is another area of concern. According to Bloomberg News, Netflix Inc. dropped the most in seven years after the video-rental service said it lost 800,000 U.S. subscribers in the third quarter, more than expected, and predicted more cancellations over a price increase. Netflix plunged 35 percent to $77.37 at the close in New York, the biggest decline since October 2004.” (Bloomberg 2011). When prices continue to increase without any major benefits to the consumer, the customers get frustrated with the company and look elsewhere for similar services. Each time that Netflix raises the prices they are losing customers by pricing themselves out of the market and this is an area of concern for Netflix. Finally, entry barriers have hurt Netflix and slowed their potential growth. Netflix is a service which can be accessed via a person’s television, computer, cell phone, or even tablet. However, Netflix does not have any major partnerships that allow the Netflix application to be instantly placed on the device. For instance, when a consumer purchases a smart TV there are several applications which come pre-installed. This provides the company with costumer accessibility and leads to more awareness for the company. Without Netflix having any major partnerships with game consoles, television brands, or tablets, their application is not pre-installed causing Netflix to miss a great opportunity to reach new customers and market segments. All of these issues are extremely important and can greatly affect Netflix in the short and long term future. If Netflix wants to keep a competitive edge and remain at the forefront of online streaming,
- Reasons for recommendations: 1. Value and variety: When it comes to customer satisfaction a company needs to create value by creating value, since Netfix maybe struggling with customer retention. a. Interactive video and games: now a days interactive videos appeal to children and interactive games to the gaming generation b. Music videos: since we see MTV and other music channels failing, followed by the viewing times that are unconventional- leaving people forced to watch when the network provider offers this entertainment. Netfilx may have an advantage offering a music video segment where they can offer many different genres, offering an entertaining system for their guests. c. Sporting events: European sports are becoming more of an interest to American’s, but unfortunately due to time difference and cable package option, leaves this industry difficult to view and in high demand. d. Progress with own series: Orange is the New Back and House of Cards, are very successful series that are created by the Netfix company. These successful shows are just the beginning of what could be and if done right company can reap the rewards. e. Add original content that reached to demographics: This topic is very important when nit come to spreading into new foreign territories. Each customer wants and needs to feel special.
- Reasons for recommendations: 2. Innovation & Technology: Being a market leader in this industry, demand that you grow in innovation tactics and technology tends. a. Stream live and store in cloud: As we know the world is growing more and more connected to the cloud and it store ability. The investment is a positive one, put a company must know that if they want to grow they need a software or subscription platform like Salesforce.com that can grow or down size with the company when necessary. Right now the cloud platform is not as effective as it should be leaving the customers dissatisfied with “loading errors” and other internet problems. b. Rent a Internet partner: Joining hands with a powerful internet provider may help seal the deal. The way this industry is going shows that the most powerful life life may be building contracts with internet provides, solving all other external issues that are created with hardware. c. Home entertainment system: America is looking more and more into creating a theater within there own home. As this may not be a big interest in the EU, we se the decline of visits to view movies outside of home. People want to be in there own comfort, and view what they please, meanwhile know what to expect from viewing.
- Reasons for recommendations: 3. Internationalism Strategy: It is possible to destroy the barrier to entry by building partnerships and allies. Every one needs them and needs to know how to develop and build them in international business! a. Legality issues: This is the worst struggle the company has to compensate for because of the reluctance between external production company’s, local legislation, and world wide network privileges that tie in with contracted debt to do so. No one country like a raise in price for a foreign discrepancy. They claim it our fight not ours! b. Anti Pirating Organizations: The benefits of this program sound daunting but offer great benefits like promoting digital media the legal way.. making it possible and affordable to many industry, since the content is resold over and over again. c. Copyright Laws: working on this will allow the golden stream of streaming worldwide. Why is this important- because this is a untapped industry by many. Most are scared of the process, and are unable to in vision the reward or stream of prosperity it may open.
- Scalability, Economy of scale, joining with internet provider- providing own content, language layover (not subtitles),