Essay Example on Netflix operates within the entertainment and streaming Video

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Netflix operates within the entertainment and streaming video on demand SVOD industry Businesses connected with music films TV and other forms of media form the entertainment industry By the same token the streaming video on demand SOVD industry refers to businesses offering subscription video on demand services This video streaming method is similar to traditional TV packages as it allows consumers to view as much content as they wish to do so at a flat rate per month Currently Netflix operates in an oligopoly market This type of market involves a handful of highly competitive powerful firms that hold the majority of the market share in an industry While exiting the industry is not difficult firms face many entry barriers such as high capital requirements complex technology and specific certifications to operate Some of the major entry barriers include acquiring creating and licensing content offered Also another recognizable barrier is creating a network that has the ability to hold a substantial amount of video content while supporting many website visits without crashing 



This capability is very expensive and may deter many businesses from entering the market This being said in the SVOD industry the increasing technological advances have allowed certified content providers to enter the industry with greater ease Competition Table 1 Netflix faces a fair amount of competition as the television business is very young and competition is just beginning to become serious As the SVOD market expands and grows in popularity Netflix will continue to see an increasing number of competitors Netflix faces competition from both cable television companies like Disney and HBO and Internet streaming services such as Amazon Prime Hulu and HBO now Specifically Netflix s only serious competitor until recently has been Hulu Major companies 21st Century Fox Disney Comcast and Time Warner are all co owners of Hulu meaning that they are able to provide a wide range of movies to their consumers This acts as a threat to the prosperity and growth of Netflix as it forces the firm to consistently and frequently add new television shows and movies to their libraries to stay competitive While Netflix has a very impressive short term record compared to HBO and other video streaming platforms such as CBS the company also has a small library of popular original content which can decrease demand To make competition more intense competing services such as Sling TV Direct TV Youtube TV and Popcorn Time are also newly entering the market Furthermore market analysts are beginning to forecast the plummets in the Netflix stock as Apple TV officially debuts Justifiably Apple is known to have a tendency to win over marketplace competition as the brand is very popular and trusted Rationale My partner and I invested in Netflix on Friday November 3rd 2017 which was one week after the release date of the second season of Netflix's original series Stranger Things 



This show was very popular when it the first season was introduced back in July 2016 Being a short season of only eight episodes viewers were anxious for the second season to be released on Friday October 27th 2017 This caused great excitement throughout the year so when the date of the second season was finally released it caught the eye of many investors similar to us We believed that by investing in the company at this time the market value of the stock would only increase and would see a great profit return Furthermore Netflix has become a very successful video streaming company arguably the most popular with 109 3 million subscribers globally For this reason my partner and I thought that this would simply go up in value and we would see a great profit in investing Netflix differentiates itself as a video streaming company by providing frequent additions of diverse original movies and television shows at an affordable price This being said as a rule consumers follow consumer utility This term means that they wish to maximize what they receive for the cheapest price Netflix being affordable for the masses and providing quality content allows consumers to get the best services for relatively cheap prices Without a doubt this promotes brand loyalty and attracts new consumers Overall one can see that Netflix is a very profitable and positively developing company that will see great success in the future if they continue to expand their consumer base and provide quality content for all Major factors affecting the future performance of Netflix s stock International expansion Advances in technology and modification to international streaming laws have provided video streaming services such as Netflix the opportunity to expand internationally and to increase their market share While Netflix currently operates in 40 countries they wish to continue to expand globally into different cultural markets If the firm is successful in expanding their market influence will increase significantly which will in turn increase the demand for the company's services and in turn their stock 



Technology Advances in technology provide certified content providers such as Netflix the opportunity to expand and grow with minimal costs By the same token it makes it much more difficult for consumers to stream videos online illegally Either way this poses an advantage to video streaming businesses as this will encourage more users to purchase subscriptions to fulfill their viewing needs Currently Netflix estimates that there are over 10 5 consumers illegitimately using their services without paying Individuals do so by sharing accounts with friends or family living in different households Through research the firm estimates that there is an additional 20 potential consumer base based off of these sharing consumers If these individuals were paying customers the firm would see a 1 2 billion dollar boost in their revenue If the company is able to prevent illegitimate use of their services or to encourage illegitimate users to subscribe to the firm they will able to not only increase their future revenue but also grasp a greater market influence

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