what do you believe is a limitation to only evaluating those competitive forces
ID: 351559 • Letter: W
Question
what do you believe is a limitation to only evaluating those competitive forces for Netflix. In other words, what implications are NOT considered when only utilizing Porter’s 5 Competitive Forces and how might you identify those additional external factors?) Offer supporting rationale for your explanation and be sure to reference your statements using proper APA formatting.
Here are my comments:
Company Netflix:
Rivalry among existing competitors:
With increasing number of new entrants, categorized as digital streaming providers for digital-on demand market companies like Hulu, Google Play, YouTube and Amazon Instant, Shomi and Crave TV have relatively increased rivalry.
Different Value propositions among these organizations in terms of variety of content, can act as a benefit for consumers to opt and subscribe for multiple service providers
Licensing agreements with Netflix, which permit Netflix to air prior seasons of many popular television shows has increased the viewership of new episodes and hence it’s revenue(Pelts, 2016)
Netflix is more dependent on volume, and consumers sensitivity to price with options available, may increase vulnerability to competition (Jurevicius, 2013)
The bargaining power of Suppliers
Netflix gets majority of its content proprietors/ suppliers through licensing agreements. H with have considerable bargaining power. When licensing agreements expire, these suppliers may chose to renew/ terminate their license with Netflix, hence here suppliers have an edge
Netflix does not have/ own the rights to the original content of Movies/ TV Shows etc., but only to stream programs
it need to keep acquiring various licenses and maintaining viewership
Threat of New Entrants to the market
Other such services are available to customers of many television providers, while Netflix is accessible only via internet.
Existing amount and variety of content, user friendly accessibility makes Netflix enjoys a competitive advantage in share in market
HBO and CBS, Shomi and Crave TV are some new entrant threats
The bargaining power of Buyers:
Customers have an option to cancel subscription at any time without any termination fees
Netflix is comparatively inexpensive to any traditional media
Its low price and high variety and amount of content available drives more consumers in
Piracy sites like Popcorn Time are providing free streaming services, are a major threat in future
Threat of Substitute Products/Services
Substitute products include satellite and cable television, DVDs and DVD rentals, and movie theatres
growth of on-demand video streaming is more popular means for accessing content compared to any traditional ways
However, some old aged/ traditional kind of viewers may be reluctant to adopt any such new technologies due to less user friendliness to them
But at the same time, traditional substitutes for digital streaming services are higher in price and not always rapidly accessible
With the swift changes in technology, the threat of substitute products might actually finish in late future
Explanation / Answer
With respect to five force analysis of Netflix following assumptions were made in order to conduct five force model analysis.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.