Netflix

Assessment Task 3 - Research Portfolio

Lecturer : Chantal Neri

STUDENT : JULIEN MARTINEZ

LTU NUMBER : 20196956

An introduction and background to the study;

Netflix was created in August 1997 by Reed Hastings in Silicon Valley, California, at the beginning of its activity Netflix offers a DVD rental system by mail order.

Subsequently, the platform will become the leader in streaming films and series.

Since then, Netflix has been one of the giants of the Web and is the leader in the media and entertainment industry. Netflix has more than 120 million paying subscribers worldwide with a turnover of more than $10 billion.

2) Netflix’s External Environment;

Political:

In terms of politics Netflix is an American company with its headquarters in the USA. Nowadays the United States has many restrictions with countries all over the world, especially in North Korea and Syria. As far as taxes are concerned, Netflix is also impacted internationallyIn addition, in order to be able to comply with European laws, Netflix will have to adapt its programs by producing European programs on its platform.

Economical:

Exchange rates always have an impact on the revenue received by Netflix. Due to its internationalization, Netflix has different costs around the world. Netflix is also the leader in this field, and its membership is increasing every year. It manages to separate itself from this direct competitor thanks to low prices that remain much more attractive compared to other media. With more than 120 million subscribers, Netflix has a turnover of more than $10 billion and a market capitalization of more than $100 billion.

Social:

As far as their social impact is concerned, Netflix is present on many sides. Netflix is extremely committed to their community and work environment. Netflix has a very relaxed working environment. Also for students, Netlfix helps students with low incomes to pay their school fees. On many occasions, the CEO of Netflix Reed Hastings has made many significant donations to charities.  

Technological:

Netflix has invested heavily in research and development, in these many projects in terms of innovation. Netflix has implemented the switch to 4K resolution on its platform. This will give a huge competitive advantage. Netflix will also invest in a Hermes translation program that has recently been taken offline in order to create even more powerful software.

Environmental:

With regard to the Netlfix environment, Netflix is developing each year, particularly with regard to their carbon footprint, and each year Netflix significantly reduces its carbon footprint. Netflix also uses wind turbines to provide their own energy. Netflix intends to take action on the environment through environmental protection programs in collaboration with green organizations.

Legal:

From a legal point of view, Netflix fights hard against copyright protection and video piracy. At the consumer level, Netlfix had many problems following a price increase. Netflix had to face justice on these various cases.  

3) Netflix – A Five Forces Analysis

Competitive Rivalry

There is a huge rivalry in the field of film and series rental. Nowadays consumers have the choice of several platforms competing with Netflix to watch series and movies online. There are platforms such as, Youtbe, Google Plus, Amazon Prime, OCS... Netflix's main competitor is Amazon. Today Amazon Prime is the only company with a significant level of capital and has achieved economies of scale. In order to reduce this rivalry, Netflix must offer different and better quality content.

Bargain Power of Supply. 

Netflix's main suppliers are the major film and series productions that offer shows to the platform every day. As a result, large producers use their negotiating power by selling their products at higher prices or to Netflix's competitors. As a result, Netflix has been making its own productions in recent years and has invested more and more in the production of series and films.

Bargaining Power of Buyers

Consumers are very demanding, they always want to consume as cheaply as possible. Netflix will have to quickly generate a number of members on its platform to gain more strength and offer more content to consumers. In order to be able to increase the number of members on their platforms Netflix will set up screen sharing for a subscription so that several people can benefit from it at the same time. In order to reduce the bargaining power Netflix had to make a big sacrifice in terms of the company's profits in the early years. Netflix's main interest in recent years has been customer satisfaction and they will continue in this direction.

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