Introduction: What is Netflix?
Netflix is a digital streaming service that emerged comparatively recently as an alternative to other better-known options, which included Hulu and Amazon at the time. Having grown and expanded over time, Hulu has warranted the support and trust of its users by providing a variety of services for a comparatively small price. The company has been widely known for its high entertainment value and several hit television series that have already gained an impressively high status among viewers (Varma, 2018). Netflix’s stock price has been impressively high, reaching total of $301.05 in 2017 (Varma, 2018). However, despite its astonishingly rapid and stellar rise to the top of the industry, Netflix still has some unresolved issues and risks to manage, especially in the environment of the present-day global economy.
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There is a plethora of risk factors that Netflix could view as possible obstacles that it may need to overcome in the future. Moreover, despite the fact that Netflix has been doing quite well in its niche, the company has been facing a range of risks. Specifically, reliance on licensed content suggests that the organization may eventually run out of shows to air (Varma, 2018). Although the specified threat cannot be considered as the urgent one, t has been looming above Netflix since the day when it was created. To mitigate the specified risk, the company should consider producing its own content. However, the suggested solution will entail quite a range of costs for which Netflix may not be ready yet. Nonetheless, the focus on innovation as the fundament for developing and reinforcing Netflix’s competitive advantage should remain in its place. Moreover, innovative thinking must be placed at the basis of Netflix’s R&D, as well as the development of new content. Thus, the organization will attract new audiences and keep the enthusiasm of the current one.
Another strategy that Netflix should consider to maintain its present performance rates and avoid risks effectively is linked to the firm’s financial framework. Indeed, the pricing power that Netflix has managed to maintain over years of its performance has been both the source of the company’s competitive advantage and the cause of its gradual demise. Due to extraordinarily low streaming prices, Netflix has been very popular, ye the specified approach has lately started to affect the organization’s profitability. To resolve the described concern, Netflix may want to introduce VIP services to its customers, where they could enjoy unique content or service for extra price. Furthermore, increasing the availability of Netflix’s content could be regarded as the next most important priority for the organization to reach an even higher stage of development. With the focus on product diversification, which Netflix has been supporting for years, the company will remain on top despite the current hindrances.
Conclusion
Netflix’s business model has allowed the company to become quite prolific over the past several years, causing its popularity to explode. However, due to a combination of external and internal negative factors, including the lockdown and the financial concerns within the organization, Netflix has not been doing good recently. Therefore, it is critical for the company to revamp its business model and alter its pricing strategy along with its product differentiation and marketing strategies to keep its audience growing. As soon as Netflix overcomes the specified impediment, it will gain additional competitive advantage, producing its own series and attracting customers with its innovativeness.
Reference
Varma, A. (2018). Qualitative evidence for a behavioral extension of the expectancy valence theory: The Netflix-Twitter-Yakult case. Theoretical Economics Letters, 8(15), 3457-3469.
