Falling the popularity of Television
During the past few generations, Traditional TV was one of the most popular modes of entertainment around the globe. Television advertising also has long been the best way of attracting viewers every day. Even though TV is a cheap and easy source of entertainment, but due to several significant reasons, it seems the popularity of TV channels are being declined throughout the recent past.
Mainly due to commercials and, mismatches of choices of the viewer; the popularity of TV channels were getting declining dramatically. Further, “difficulties in watching online programs” have been supported the argument of the present generation.
The requirement had arisen for a mode of visual experience that terminate the above-mentioned disadvantages and finally, inventors have introduced the best possible solution to the requirements of the viewer. “Online streaming Channels”.
Introduction of Netflix
According to Netflix Investors (2020), Netflix is one of the world's leading streaming entertainment companies, with 183 million paid members in over 190 countries and a wide variety of genres and languages, with TV series, documentaries and feature films. Members can watch on every Internet screen as much as they want, whenever, wherever they are. Members can play, pause and resume watching, all withoutadvertisem*nts or commitments.Since 1997 Netflix leads the way for streaming content.
Source: businessofapps.com
Used strategies
The standardized approach of Netflix ensures that the business model offers sufficient competitive advantages. The nature and profitability of the company balance external forceslike Walmart, Amazon, Google, Apple, HBO, Disney and other firms. The intensive growth strategies of Netflix promote market success by confronting these external forces. The adherence of these development approaches to the traditional market plan and model guarantees the operating productivity and benefits of the competitive advantages of the product.
Netflix's Business Models
Studies of Rivera (2019) revealed that, despite increasing competition, Netflix Inc.'s core competencies ensure business profitability. These competencies reflect the resources and capabilities of the online company which support long-term competitive advantage in the framework of the VRIO / VRIN analysis. Netflix's value chain uses these key competencies to offer consumers or subscribers efficient services.
A company's VRIN / VRIO review provides a resource-based view of the on-demand digital media market and defines the most critical tools and capabilities for sustainable competitive advantages. As the strategies of Netflix change, so do the factors that contribute to the core competencies relevant to the strategic planning process.
Netflix’s operations exhibit the following business models (Moore, 2019)
1.Platform (digital media marketplace) and Pipeline (entertainment content production, etc.) business models
Netflix Inc. primarily as a business model structure for their video streaming activities. The same platform gives consumers access to their preferred entertainment content. Netflix Inc. is using the conventional pipeline approach to produce new films and shows. The pipeline business model helps the client to directly control material output. It backs the intensive growth of Netflix
2.Cutting-out-the-middleman business model (production to distribution)
Netflix Inc. bypasses intermediaries or middlemen by delivering its original content directly to consumers through its own streaming service. In applying this business model the organization uses its strategic advantages and capabilities. Other entertainment content providers can transact directly with Netflix to reach target audiences worldwide, thereby supporting the company's intensive growth.
3.Unlimited subscription business model (revenue model for unlimited online access)
Unlimited streaming by Netflix is a marketing model that is representative of the overall business model of the organization. Customers have unrestricted access to entertainment content at the website via unrestricted subscription. This business model helps attract and retain subscribers and increases Netflix's growth initiatives success levels.
Source: fourweekmba.com
Netflix’s Generic Competitive Strategy (Moore, 2019)
Netflix's generic strategy is cost leadership, which ensures competitive advantage in Michael E. Porter's model. Netflix is gaining more customers in the online entertainment industry through this standardized approach. This traditional strategy specific approach aligns with Netflix's aggressive growth initiatives, which emphasize market penetration. The approach builds on the business model and the value of the company.
Netflix applies cost leadership primarily as its traditional competitive advantage technique. The organization also employs diversity in its activities. Netflix, for example, maintains its competitive edge by making its own original content. The generic differentiation approach helps the business model to attract and retain its clientele.
Netflix’s Intensive Growth Strategies (Moore, 2019)
Netflix Inc.'s key ambitious expansion plan includes providing more subscription content to the internet company in markets the business already has. The goal of this growth plan to boost sales and market share depends on whether the conventional approach of Netflix preserves competitive advantages.
Business growth works by promoting the existing online subscription service and original content to new audiences within the business. The standardized cost leadership approach from Netflix leads to the success of this intensive strategy for growth.
Creating and selling new goods in the existing markets of the online sector. Success depends upon how the corporate culture of Netflix promotes related processes of product innovation. Netflix is using its generic competitive advantage strategy to efficiently generate new content for existing subscribers.
The aim of this intensive growth strategy is to grow the business through new operations outside the current online streaming business of the company. This development is possible due to the traditional approach of Netflix and the flexibility of the business model for new operations. The functional improvements that accompany this growth plan will include new components in the organizational framework of Netflix Inc.
The success story of NETFLIX as per studies of Iqbal (2020)
Conclusion
In a highly competitive market, Netflix is a market leader. Technology is continuously progressing and competitors are still entering the market. In order to retain its benefit, the organization was able to introduce innovative tactics so far.
But the biggest threats they are currently facing is, increasing competition in the market, government influences, and some television providers are offering free content. But still, Netflix can expand its international market in order to survive in the competition. However, still, Brand awareness and reputation of the company is growing further. The client base is also rising. The reason is providing the best products to the customers with competitive costs.
The main strategies they are currently using is focusing more on potential markets and the production and distribution of more original content to its subscribers. Increasing the production of more original contents and further reducing prices as well as making global trends for its contents can be recommended in order to gain more profits and competitive advantage in future.
Article Author: Ruwan Weerasundara
References
George, R., 2020.Netflix Illustrates the Importance of Competitive Context.[Online]Available at:https://hawkpartners.com/category/go-to-market-strategy/
Iqbal, a., 2020.Netflix Revenue and Usage Statistics (2020).[Online]Available at:https://www.businessofapps.com/data/netflix-statistics/
Moor, B., 2020.Amazon Prime Video Review.[Online] Available at:https://www.pcmag.com/reviews/amazon-prime-video
Moore, A., 2019.Netflix’s Generic Strategy, Business Model & Intensive Growth Strategies.[Online] Available at:https://www.rancord.org/netflix-business-model-generic-strategy-intensive-growth-strategies-competitive-advantage#:~:text=Netflix's generic strategy focuses on, to expand multinational streaming operations.
Netflix Investors, 2020.Company Profile.[Online] Available at:https://www.netflixinvestor.com/ir-overview/profile/default.aspx
Rivera, A., 2019.Netflix VRIO/VRIN Analysis & Value Chain Analysis (Resource-Based View).[Online] Available at:https://www.rancord.org/netflix-vrio-vrin-analysis-value-chain-analysis-resource-based-view
