Question

1. What are three challenges that Netflix faces? 2. What are the key elements of Netflix's strategy today? 3. Why is Netflix in competition with Apple, Amazon, HBO, and Google, and what strengths does Netflix bring to the market?please need good answer!

Answer 1

1. What are three challenges that Netflix faces?

Netflix is a network for storage and distribution, which does not own any of the content it distributes. First, the challenge faced by Netflix is the risk of making new content, so it's not special and has a lot of strong competitors. We are beginning to produce their own television programming because they are not in the Hollywood or New York industry of talent markets for actors, directors and the like to create premium content for subscribers. The development of original material according to the text is considerably at risk.

The second challenge is Netflix is facing increased competition from other companies. The success of Netflix’s streaming model has attracted companies such as Amazon, Apple, Yahoo, Google, and content producers like Hulu and HBO to the fray. Netflix does not have unique technology. Amazon prime is continuing to increase the selection of its online streaming selection as it enters into more partnerships with movie studios. Netflix’s competitors have very deep pockets. This means Netflix also has competitors for talent and the production of new content, and perhaps price pressure as well.

Another challenge for Netflix is the rising content costs. The cost of content is very high. According to the text, “Netflix’s poor profitability is that the costs of content are very high, both purchased older series as well as new content, which is far riskier. The owners of older cable TV series and Hollywood movies charge Netflix for the privilege of distributing their content as much as they do establish cable TV networks. This means they are owners of the older series as well as the new content are constantly increasing the cost for the series. In 2016, Netflix reported streaming content obligations to content producers of $12 billion! With $6.7 billion in gross revenue, it paid out $5.7 billion in payments to content owners (mostly cable networks) and production studios for original content. Netflix barely makes any profit.” The text states, “the cost "of business rises faster than revenue.”

2. What are the key elements of Netflix's strategy today?

In the movie and TV business there are only two ways to make money: either own the content or own the pipes that deliver the content. All the better if you can do both.

The key elements of Netflix’s strategy today are to strike deals with Comcast and other ISPs to develop high speed Internet service to its customers. Another key element is to reduce content costs by producing their own content, expand the foreign market where opportunities for growth by hitting their goal to 100 million subscribers higher than U.S. and expand its offerings of high-quality televisions series. Another huge key element to their strategy is to increase their marketing, always giving customers to watch Netflix at the convenience of their android or smartphone. Netflix gives their customers a variety of movies and TV series that is not widely available with such high quality.

3. Why is Netflix in competition with Apple, Amazon, HBO, and Google, and what strengths does Netflix bring to the market?

Netflix has lower profitability then its competitors, however it has a very successful streaming technology and stands out as a powerful Internet brand.These other companies have other have unique technology, while Netflix does not have unique technology. However, they also have deep pockets and brand names while the strengths of Netflix its differentiating factors like brand recognition, algorithms to help consumers find movies and TV shows, and a growing list of production studios supplying it with original content. Netflix has the edge.

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