Generally, rivalry in the Internet streaming media industry is relatively intense and gaining momentum because Netflix has to compete with international giants and local businesses, such as Amazon, YouTube, Hulu, and HBO. Traditional broadcasters and piracy sites also pose considerable competition for Netflix. In addition, customers are highly price-sensitive, and their loyalty is weak. They tend to cancel their subscription anytime and can switch to alternate service providers. The same situation is with suppliers that can freely change companies or even offer their digital streaming services. These factors significantly limit the profitability of the streaming industry and make Netflix hold to an aggressive strategy.
Netflix’s competitive advantage is based on the tremendous investment in original content creation and renewal, helping the company build a substantial consumer base and loyalty. Moreover, because of severe competition in the United States, Netflix focuses on strengthening its global presence, delivering its services with matchless user experience in over 190 countries. However, the company possesses an imitable business model and rigid pricing, which sometimes annoys subscribers, and tightly depends on content producers and Internet service providers that ensure quality customers’ connectivity.
Netflix’s core threats, as a result of international expansion, are connected with an increasing number of competitors, including Apple TV+, Disney+, Amazon, or YouTube. Strict governmental rules and market saturation also inflict significant hazards on the company. Nevertheless, due to lockdowns and related governmental restrictions caused by the COVID-19 pandemic, people resort to Internet streaming services as a source of entertainment, which may fuel Netflix’s competitive advantage. Finally, to address cross-cultural market issues, the management should tailor the content according to foreign citizens’ preferences and values.
Regarding future strategic initiatives, Netflix can offer low-price mobile streaming options and introduce cheaper annual subscriptions to attract and retain users. In this regard, the company would position itself as a streaming service provider with reasonable pricing and perfect quality products. Second, Netflix can implement an advertising-based business model to boost its revenue. Third, Netflix should direct its efforts on developing online educational programs that are currently gaining massive popularity and applicability. Concerning the offensive and defensive plans, Netflix should promote serial engagements and watch lists, improve recommendation and personalization engines, and adopt a consumer culture strategy.
