Netflix within an International Market - Admission/Application Essay Example

How will Netflix Stay Ahead of its Competitors as it Enters an International Market in a Rapidly Changing Economic Environment Netflix is an American service donor of well admired internet streaming media in Canada, the Caribbean, Latin America, United States, Ireland and United Kingdom. Reed Hastings and Marc Randolph were the founding fathers of Netflix in 1997, in California, at a place known as Scotts Valley. The Netflix website got first launched in April 1998 using a traditional, online version of pay per rental model. Later, Netflix introduced the concept of monthly subscription and flat fee unlimited rental model without late fees, handling and shipping fees, per title rental fee, or due dates. Netflix usually presents internet video streaming of chosen titles to compatible devices and computers running either Mac OS X or Windows. Netflix library gets encoded into three different bandwidth tiers, in a format based on the Windows Media Codecs and VC-1 Video. The following are the categories bandwidth tiers: 1. The lowest tier with a bandwidth of 1.5 megabit/s, and offers video and stereo audio quality similar to a DVD. 2. The middle tier with a bandwidth of 3 megabit/s, and offers audio and video quality better than DVD 3. The highest tier with a bandwidth of 5 megabit/s, and offers surround sound audio of 720p HD. Subscribers usually create a rental queue of all the movies they want to rent. Netflix also have 58 different shipping locations in the entire United States. Subscribers usually email the previous rental movies to Netflix using a prepaid mailing envelope (Michael, page 8). Then, Netflix sends the new, available movies in the subscriber’s rental queue. Netflix profiles permit subscriber account to have multiple users with independent DVD queues, friend lists, ratings, reviews, recommendations, and intrasite communications for each. In June 2008, Netflix revealed plans to do away with this subscribers’ profile feature. Netflix believed that eradicating this feature would improve customer experience. Netflix users received the news with a lot of negative reactions and reviews. This forced Netflix to reverse its decision and reinstalled the profile feature. Netflix defended their previous original decision by claiming that simplicity can be outweighed by utility. In March 2011, Netflix revealed programs to start acquiring initial content for its widely held Watch Instantly subscription service, which will get a debut in late 2012. Netflix presently has elite Pay-TV deal with Epix. Netflix application service became available to Blu-ray Disc, Play Station 3, Xbox 360, and Nintendo 3DS consoles. On the Play Station 3, members can access and download the application via Play Station Store. In January 2009, Netflix signed a partnership deal with LG and Vizio instantly to stream movies directly using their high definition televisions. Later that year, Netflix signed similar partnership deal with Sony to allow Sony BRAVIA Internet Platforms gain access to instant queue to latest movies. In 2010, Netflix signed another deal with the Panasonic HDTVs, Google TV, Samsung Smart TV and LG Smart TVs. Netflix should make plans to expand internationally by exploiting potential global markets. Every international expansion of a company has several risks related with it given Netflix mode of business. Netflix has the challenge to transpose its competitive advantages and business processes in a new global market where administrative, cultural, economical and geographical realities are different. Netflix would be forced to renegotiate its licensing with their distributors due to the mandating nature of the films business (Michael, page 300). The potential global markets for Netflix include Nigeria, India, Argentina, China, Germany, Japan, Iran, Sweden and Mexico. The Nigerian movie industry gets also known as the Nollywood, which get recognition of being the largest film industry in Africa, and second largest in the world, in regards to the number of yearly film productions. The main Nigerian movies distribution centers are 51 Iweka Road in Onitsha, and Idumota Market on Lagos Island. Most of the African countries like to watch Nigerian movies because they are family oriented. Netflix should explore this business niche and try to expand its line of business in Africa. Indian films have a lot of followers in Middle East and the South Asia. Nowadays, Indian movies have started to get international audience in United States and in various parts of the United Kingdom. Indian films get considered to be the largest annually film produces in the world. The cinema of China gets made of the Cinema of Taiwan and the Cinema of Hong Kong. Chinese film industry get considered as the third largest in the entire world in terms of the number of feature produced films. The only challenge, which will face Netflix in exploiting the African market, is technology. The Asian and European markets are ready for technological innovations. Netflix should consider opening its branch in this part of the world. This would make the company collect a lot of revenues and a success in all over the world (Michael 320). Competitive analysis refers to the exercise of evaluating competitive environment in which a business entity operates, including the weaknesses and strengths of other business. After identification of universe competitors, the company starts to isolate the weaknesses and strengths of those competitors. Here, it is crucial for competitors to separate considerable advantages and disadvantages from minor advantages and disadvantages. Netflix market can be defined using three different parameters. First of all, the value of chain perspective gets consideration. Here, it depends on the way one chooses to define Netflix. Some consider Netflix as a distributor, giving it comparison with rental, theatres and retail video stores. In a real sense, Netflix market value gets well distinction from distributors and gets direct competition from Hollywood Entertainment, Blockbuster, Family Video and Movie Gallery (Michael 255). Secondly, the release window of Netflix Market gets into a consideration. If one takes a shallow view of the release window as a feature in expounding the market of Netflix, then its direct competitors will include premium and basic cable, video renters, video retailers, and satellite. If a broader perspective gets taken, movie theatres, airlines and hotels might be taken into account. If the online feature of Netflix business got taken into consideration, Netflix would not be in the same line of business with Hollywood Entertainment and Blockbuster. Learning about client wants and needs is a vital part of competitive analysis (Michael 178). Innovations in service and new products developments are crucial to business success in almost all businesses entity. Business managers must study and anticipate customers’ future needs and wants. The following are the five forces of analysis: 1. Suppliers – competitors can enjoy the prestigious advantages of forming alliances with the distributors, movie studios and parent companies. Such openings should be insistently pursued. For instance, Netflix gets their movies from Hollywood film distributor, then they get shipment services from United States Postal Service, and they get payment services via Master Card, Discover, Visa and American Express. 2. Buyers – Movies are identical merchandise, which can be easily acquired from any seller. Most of the buyers have low bargaining power forcing them to purchase a movie from the vendor that offers it at the lowest price. This makes all the competitors offer low and comparable prices. Netflix have freedom because it renders service to the end consumers (William14). 3. Substitute – Movies are simply movies regardless of the nature of their set ups. However, piracy offers a threat to the movies industry. Netflix should also consider other in doors leisure activities as a threat. Nowadays, video games get popularity in the ever growing entertainment sectors, which can also be used as a direct substitute to movies depending on the consumers’ preference (William 15). 4. Complements – For one to enjoy Netflix services, they have to acquire several essential components. This includes TV sets, DVD player or Video Game console, computers, and internet connection. 5. Competition – Netflix have to identify its current competitors. Walmart, Blockbuster, and Movie Gallery are among the top competitors to Netflix. Netflix should continue the advancement of their film download services and start to advertise and publicize it as soon as possible. Most of its customers have the habits of ordering and renting movies via website. This would make the download movies easily rather than waiting for shipped DVDs. Netflix should also provide pay as you view services to reduce competition from satellites and cable TVs. They should also employ aggressive advertising method to beat off all their competitors (William 16). Competitor analysis in strategic and marketing management is a review of the weaknesses and strengths of current and potential competitors (William 18). This provides both the defensive and offensive strategic framework to point out threats and opportunities. Competitor analysis gets considered as the main component of corporate strategy. The lack of adequate basic infrastructural and national ICT strategies and socio-economic has created a considerable barrier in the growth and adoption of video streaming business in developing countries. In order to appreciate the diffusion and adoption of video streaming in the developing countries, one has to consider cultural issues. E-commerce can be considered as an important tool of improving economic growth of developing countries. Internet technologies offer a lot of opportunities for the film industries in the developing countries. Accessing the web is probable only when PCs and telephones available, which are scarcely in supply. However, internet access is costly in terms to per-capita income in the majority of the developing countries. The cost of installing, maintaining, operating, training and support of technology is way above the means of local citizen in the developing countries, which might not have favored Netflix market. Netflix would find it harder to survive in an environment with non-existent secure payment facilities and lacks infrastructure (William 56). The electronic transaction facilities in the developing are deficient with inadequate regulatory and legal framework. Netflix consumer market would face harsh treatments in terms of ability to pay, willingness to make purchase, connectivity, deliveries, credit cards ownership, and accessibility of physical deliveries. Access to technology, such as Internet, connectivity and computers, and limited bandwidth get limited by lack of reliable infrastructure. This decreases the capacity to handle graphic and audio data due to unreliable electricity supply and poor telecommunication infrastructures. The monthly internet subscription fee surpasses the monthly income of the majority of the citizen living in the developing countries. This might even kill the market of Netflix because the majority of the people are unable to either purchase or rent a movie online (William 38). Normal people in the developing countries usually lack funds to either own a computer or pay for internet services making Netflix market struggle in such an environment. In developing countries, most banks usually have no national clearing and possible customers are afraid of cheats. Therefore, a few people normally get the prestige of possessing a credit card. Some of the internet users are not well informed about online purchasing trait, which will make business for Netflix hard. Most of the developing countries do not have a central bank or financial institutions mechanism that can match the task of secure credit card payments. This might also hinder the development of Netflix market. Logistical changes need to take place in most of the developing countries, in order to build an appropriate surrounding for efficient participation of online marketing. Ineffectiveness of crucial services, such as the postal service can lead to delay of products. This makes the customer to be frustrated with the company. Netflix mostly rely on distributors to meet consumer expectation. This might not be the case in developing countries since they have an outdated and old fashioned delivery system (William 40). Works Cited Michael A. Hitt, R. Duane Ireland, Robert E. Hoskisson. Strategic Management: Competitiveness and Globalization : Cases. Connecticut: Cengage Learning,, 2009. Roebuck, Kevin. Netflix: High-Impact Strategies - What You Need to Know: Definitions, Adoptions, Impact, Benefits, Maturity, Vendors. Tennessee.: Lightning Source Inc, 2011. William M. Pride, O. C. Ferrell. Foundations of Marketing. Connecticut: Cengage Learning, 2012. William M. Pride, O. C. Ferrell. Marketing. Connecticut: Cengage Learning, 2011. William M. Pride, Robert J. Hughes, Jack R. Kapoor. Business. Connecticut: Cengage Learning, 2006. Read More