Discuss the competitive forces in the rapidly evolving global market for streamed video content.
Instructions
For this assignment, complete the case analysis following the instructions below and develop a 3–4 page executive summary that includes your analysis from Part 1, Week 5.
Discuss the competitive forces in the rapidly evolving global market for streamed video content.
How strong are they?
Develop a five-forces analysis to support your answer.
Describe what forces are driving change in this market for streamed entertainment.
Are the combined impacts of these driving forces likely favorable or unfavorable regarding their effects on competitive intensity and future industry profitability?
Identify what key factors will determine a streaming company’s success in this industry in the next 3–5 years.
Evaluate Netflix’s strategy.
Which of the five generic competitive strategies discussed in Chapter 5 most closely fits the competitive approach that Netflix is taking?
What type of competitive advantage is Netflix trying to achieve?
Develop an executive summary that includes a recommendation for Netflix based on your analysis using both theory and practical managerial thinking.
Support your recommendation by providing at least three quality resources outside of the textbook.
References and citations:
Provide at least two quality resources from the Strayer Library and/or outside sources.
Note: Wikipedia and Web-based blogs do not qualify as credible resources.
In-text citations are required when paraphrasing or quoting another source.
Netflix Case Study Part 1
Kennia Brumby
Strayer University
BUS 508—Contemporary Business
August 6, 2023
Netflix Management Analysis
Forces driven change in the stream entertainment Industry
The streamed entertainment industry has, in recent years, been experiencing changes that the following factors have pushed:
High-speed internet
Most stream entertainment consumers can now access 5G internet, which seems to be 3 times faster than 3G and 4G; hence they can stream videos and TV series online. The rolling of the 5G internet has made many consumers change how they consume media and live stream, forcing most entertainment media players to change their business strategies.
Change in Consumer Preferences
Globally, consumer preferences have changed since most consumers now prefer streaming and watching their movies and TV series on whatever devices they have when they feel favorable. The continuous change from watching satellite and cable TV to live streaming has allowed entertainment channels to widely change and target streaming subscribers.
Invasion and change in multinational rich companies’ strategies
The extent and vigor to which most rich and fully equipped resourced companies acquire and build new entertainment libraries have changed the live-stream entertainment industry. The change has been pushed by these rich companies building new libraries, merging with existing ones and funding the global market campaigns to promote the contents of these entertainment libraries.
The long-term combination of these three factors seems competitively favorable for the firms involved in modern live streaming while unfavorable to those stuck on providing satellite and cable TV programs. The live streaming firms are therefore attracting more subscribers and expected to make more profits in the future, while the cable TV program providers are losing subscribers. At long last, their profits will continue to decline.
Strategic Group Map of the Live streaming industry in 2020
Industry Data Table for 2020
Based on the data provided for 2020, Netflix is strategically positioned over its competitors since it is gaining more subscribers by providing more original content. The subscribers are also at liberty to choose the subscription class to pay. Netflix also charges higher prime levels monthly, considering it provides high-quality content than its competitors.
Netflix Financial Data Situation
The financial data provided analysis indicates that even if Netflix revenues have increased yearly, the company’s gross profit margin has also been stabilized to follow the increasing trend since 2016. The main concern on the company’s profitability shows that even if it has a larger gross profit margin and sales, it only retains less than 10% of its net sales, as shown in the calculated net profit ratio.
Even if the company has been using its shareholders’ funds effectively to generate revenue over the years, as shown by an increase of Return on Equity calculated, the management utilization of total assets in generating net income has been low since its less than 10%.
The company’s current ratios calculated show that its current assets were enough to pay off the current obligations until 2019, where it was less than 1 hence indicating that in the 2019 period, the company was lowly liquid. Suppose the current obligations are settled using the available cash and cash equivalents. In that case, the company will be lowly liquid since the calculated cash ratios over the years have been less than 1.
The management should therefore increase the amount of cash to retain and lower the operating expenses to have a higher net profit retained at the end of the year.
Netflix Competitive Strength
The report shows that Netflix Company has for years experienced exponential growth because of its influential brand globally. The spread of Netflix’s influential brand has increased the brand reputation, increasing the number of subscriber referrals.
Unlike its competitors, Netflix Company has been able to spend billions of dollars to produce original content that is not on other platforms, differentiating the company from its competitors. The original series contents like Tiger King, stranger things and even Money Heist can only be streamed on Netflix platforms (Gregory,2021).
Netflix weighted competitive strength assessment.
Based on the original content, the Netflix company has invested more in original content than its competitors. Its success also depends on its technology, which enables it to create an effective platform compared to its rivals, and that’s why it had a larger weight and rating than others.
Its customer service tends to be weak compared to its competitors, such as Amazon, Disney and Peacock, which have reduced their weight to 0.10 depending on customer complaints and experience.
In conclusion, as per the above discussion, Netflix has been performing well compared to its competitors, and its overall ratings are also higher than the competitors. The company’s profitability is also expected to increase if it corrects the above-mentioned main concerns.
Reference
Gregory, A., 2021. Complete Analysis of Netflix, Inc.
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