DRIVERS OF CHANGE IN THE STREAMING INDUSTRY
DRIVERS OF CHANGE IN THE STREAMING INDUSTRY 4 2. Mobile Technology 4 2. Connectivity Technology 4 2. Personalization and Big Data Solutions 5 2. Consumer Habits 5 2. Works Cited 13 Executive Summary Netflix is the market leader in the highly competitive streaming business. It has, however, demonstrated itself to be innovative. The global business environment presents significant opportunities especially with the unexploited potential for broader distribution in the international market supported by growing technology and infrastructure. The company, nevertheless, has to contend with vicious competition and challenges associated with internet fraud and privacy concerns. Overall, however, the future promises major success for Netflix in the global streaming business arena. The company delivered DVDs to customers at a charge. Today, however, Netflix has transformed itself into a complex digital TV and film library with a global reach and sustained profitability that hit 558.
million dollars in 2017 (Ritcher). Its services are accessible in the United States, Mexico, Canada, some European and South American countries among other countries. In the US, Netflix commands about 50% of streaming business (Christian and Spooner 5). Over time, mobile devices have increasingly become the primary way of accessing entertainment and media content across the globe, as opposed to the traditional channels of distribution (Eeden and Chow 7). Regarding global media spending, access to media content via digital gadgets is registering the fastest growth, (Global Media Report 2015). Spending on digital gadgets is on the rise which means more people are getting connected, and therefore, the market for the streaming industry continues to expand. Connectivity Technology The world is experiencing an unprecedented connectivity courtesy of rising investments in broadband infrastructure.
As a consequence, a significant proportion of the global population is constantly connected to the internet (Eeden and Chow 6). The ability to exploit big data solutions represents a significant advantage in the content streaming industry. Consumer Habits Consumers’ attitudes, preferences, and tastes are constantly evolving. The industry must change alongside the lifestyles and demands of the consumers. For instance, a section of customers demand a broad selection of movies to choose from, others hunt for the most affordable bargains in the market, while others just want to access movies from the comfort of their homes. The Global Media Report 2015 notes that there is a trend whereby consumers are increasingly disinterested in buying and owning content, instead preferring to spend on accessing the content without owning.
Innovation The media and entertainment industry is quite prone to technological advancements. Rapid changes in technology potentially pose a risk at the macro level for the majority of business establishments in the media and entertainment industry and increase the likelihood of hurting profitability. However, technological advancements also present opportunities for innovations. Particularly, businesses can improve the products offered to customers, branding, and adapting business models that enhance the experience of the user (Bothun and Silver 27). Companies in the entertainment industry like Netflix are innovating to boost customization of products, attain market segmentation, and build brand equity. Another notable distribution strategy in the industry involves acquisitions. Still, other firms are opting to pursue deals with established tech giants so that the firm’s content reaches the consumers via social media platforms like Facebook.
Such has been the relationship between Major League Soccer and Facebook. Some media outlets like CNN, The New York Times, and HuffPost, have approached Facebook for similar arrangements. Netflix is also in similar agreements whereby it is pursuing partnerships, both in the US and with international carriers with the aim of expanding distribution channels. Particularly, Facebook and Google take the lion's share of advertising spending. The trends in advertising are a huge concern for the traditional media outlets that have relied heavily on advertising as a source of revenue now that most revenue is headed for digital platforms. Magazines and newspapers are particularly hard hit by migration of entertainment and media advertising to online platforms. Moreover, the advertising for content providers is packaged for delivery on mobile platforms, the most prominent communication devices for most people.
This helps in focusing the advertisement so that it revolves around the user experience. Amazon and Netflix, if at all they will maintain the advantage they currently have, into the future, they have no leeway but to invest massively in content production, even though the up-front capital required is high. OPPORTUNITIES AND THREATS FOR NETFLIX 2. Opportunities 2. Infrastructural Benefits The current trend towards greater penetration of broadband and the associated lower costs for consumers present an opportunity for Netflix to expand its distribution capacity. Internet speeds are increasing which presents lots of potential for the streaming industry (Christian and Spooner 7). Increasingly Stiffer Competition Amazon and Disney, among other players in the industry, are exerting considerable pressure on Netflix. The hold on the streaming market of such a player as Amazon, which controls 30% of US market cannot be wished away.
As a company, Amazon has the financial muscle, resources, and a suburb quality of content to keep Netflix on its toes (Christian and Spooner 5). Furthermore, some of Netflix’s content suppliers are preferring to stream their content directly to consumers instead of using Netflix’s platforms which eventually translates into more competition. Overall, the streaming business is becoming increasingly competitive. The moves can potentially trigger adverse customer response, including the possibility of cancellations. Price hikes should particularly be a concern in the US where Netflix has the highest number of customers as it could push the customers to competitors’ services which are usually cost less. Internet Fraud and Concerns about Privacy Credit card fraud and hacking are on the rise. For instance, Crime Complaint Center's (IC3) received at least 288,012 complaints touching on internet fraud in 2015 (Market Line 2017).
Although Netflix stringently safeguards personal and billing data of subscribers, some consumers may still be wary of the risk of fraud. netflix. com/en/about-netflix Eeden, Ennèl, and Wilson Chow. Perspectives From The Global Entertainment & Media Outlook 2018–2022 Trending Now: Convergence, Connections And Trust. Pwc. com. p. Web. Nov. Murdoch, Sonja. Global Media Report 2015 Global Industry Overview. ” Price Waterhouse Cooper, 2017, www. pwc. com/gx/en/entertainment-media/pdf/outlook-2017-curtain-up. pdf. pwc. edu/files/documents/krause/f17_nflx. pdf Market Line “Netflix, Inc. ” Netflix Inc. SWOT Analysis, Nov. pp. pp. EBSCOhost,search. ebscohost. com/login. aspx?direct=true&db=bth&AN=126099580&site=ehost-liv.
From $10 to earn access
Only on Studyloop