Netflix was the first to offer movie renting service
to customers online. They have a very only niche of loyal customers. They also
do online streaming of movies and TV shows, and video on demand services.
Netflix started out has an innovative price leader for DVD rentals, on a
subscription basis which offered free streaming to members. But have changed
the pricing strategy and customers have to pay a separate fee for streaming
videos. Netflix has low fix cost and is able to past on the saving to customers
through their low cost strategy. They offer rentals for lower prices than
rivals and this is what attracts their customers. Customers do not have to go
out and rent or buy movies, they can have it delivered to their homes or stream
it online and these are factors of Netflix differentiation strategy.
Netflix Swot Analysis:
Strengths
• Brand Name
• Strong financial position
• Very wide geographic coverage
• Dominant market share on online rental
• Low fixed cost
• Expertise and experience in e-commerce
• Loyal customer base
• Economies of scale
• Competitive advantage
• Skilled employees in all areas
• Flexibility and competitively low prices
Weaknesses
• Limited movie options
• Some persons don’t understand how to use their
product
• Little control over important expenses like
shipping, depending on shippers like UPS.
• Reduce demand for their high price subscriptions
• Unable to supply customers with the latest movies
• Vulnerable to technological changes
• Customers have to wait to receive their products
Opportunities
• Offering other rentals like video game
• Growing demand for online streaming
• Strategic partnership with other companies
• Expanding into Foreign markets
• Incorporating movie downloads
Threats
• Competitors launching similar products
• Piracy
• Improving technological changes
• Slowdown in market growth
• Likely entry of new rivals
• Cost of entry is fairly low web base business
The industry growth is slowing down, so it may be
beneficial for Netflix to extend their line of products. Netflix could
incorporate video games and music in their business offer. They could create
bundle offers and give customers better quality. In order to survive they need
offer their customers more for less. It’s important to keep their present
because competition is very present and the market is no longer going growing
substantially. Netflix needs to be seeing more than just another company or
website offering movies to watch. Other competitors are offering similar
products so Netflix has to continue to differentiate itself in whatever way
possible and profitable.
