Netflix is a streaming service which allows customers to watch a wide range of TV shows, movies, and documentaries. It was founded in 1997 by Marc Randolph and Reed Hastings in Scotts Valley California. Netflix originally began as a mail order DVD service, but after sellings its billionth DVD they expanded into the internet video on demand market.
Although Netflix was very successful in recent years reaching its high of over 100 million subscribers there are still some problems that need to be addressed and dealt with. Some of these problems include competition, subscriber peak, globalization, and net neutrality.There are three C’s when determining the problems that Netflix has been seeing in recent years, content, cost and competition. When talking about cost of Netflix we are referring to international cost. When In the expanding into the foreign markets Netflix has to pay more for global licensing. This is a problem especially when there is such a huge demand for more and new content in that market.
The actual subscription cost of Netflix to most parts of the world is too expensive. Netflix has raised their subscription price recently from $9.99 to $10.99 and also offers a top package for $13.99 a month. In Asian markets Netflix is the most expensive video on demand service, surprisingly more expensive than existing cable services there. Lastly, competition is a problem that Netflix has been seeing in recent years. With new companies like Hulu, Amazon Prime video, HBO Go, Netflix really has their work cut out for them. These companies have a similar business models of gaining as many subscribers as possible to maximize profit. The only competitive advantage Netflix has right now is their established name. Also they were the first big company in the market of online subscription movie/tv streaming service.
Now that there is multiple companies out there offering the same similar service its up to the consumer to decide which company they want to go with. Along with this we also see pirate websites that offer the same as all these other subscription companies like Netflix and Hulu but for free. These pirate websites are a third party competition thats hurting all of the streaming companies including Netflix and there’s nothing we can do about it.With any company there is the right and wrong time to enter into a new market. Many business experts feel that when a company is doing very well and/or dominating the competition in their home market they should branch out into new foreign markets. Timing is important when doing this because Netflix took the momentum of how well they were doing in the U.S. and carried that reputation into foreign markets.
One of the reasons for this push to expand their horizons was the U.S. only had 850,000 new subscribers compared to 4.4 million international new subscriptions that year. This information shows that Netflix is saturated in the U.S. market which means that if they want to keep growing and profiting they will need to expand on to other international markets. They have already done this however there is more to be done.