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NETFLIX
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Table of Contents
Introduction 4
Strategic Options for Netflix Future Implementation 4
Operation in Different Regions 4
Competitive Strategies 6
Competition in the Industry 6
Potential of New Entrants into the Industry 6
Power of Suppliers 7
Power of Customers 8
Threat of Substitute Products 8
Products of Netflix 8
Growth Strategies 9
Future Netflix Markets 10
Supplier Relationship between Netflix to Amazon Web Service (AWS) 12
Probable Future Strategies 13
Conclusion 14
References 16

Executive Summary
A study of Netflix reveals its current and probable future activities. This essay aims at evaluating the strategic options, best markets for the future, the competitive effect of the relationship between Netflix and Amazon Web Service (AWS), and finally future strategies. The exercise explored available literature that included case studies, books, peer-reviewed journals, and other publications on industry and the company. The result reveals that the firm operates with several strategic options and has India, China, and USA as the most suitable markets in the future. The relationship between AWS and Netflix hinders its competitive potential, but it is exposed to several strategies to help improve the situation.

Netflix
Introduction
The need for entertainment has led to commercial organization of entertaining contents by various companies that include Netflix and Amazon. Netflix started its operations in 1998 as a DVD provider to its subscribers. It sorted various DVDs containing movies that it supplied to its subscribed members through the US Postal Service (Case Study n.p). Today, it has grown and changed its business model to offering online streaming of movies, television programs, and documentaries among others. Currently, it has its headquarters in Los Gatos, California, but with a worldwide presence in over 200 countries. The business has also managed to attract over 150 million subscribers who pay for different packages of the streaming service. Its success can be attributed to adequate management as well as the available financial resources that have enabled it to expand into different countries as well as provide a wide portfolio of videos. This essay explores the strategic options of Netflix, the best investment destinations, and the supplier relationship to Amazon through Amazon Web Services.
Strategic Options for Netflix Future Implementation
Operation in Different Regions
As part of its strategic plans, Netflix aims at expanding its operations in as many territories as possible. The intention is to gain a wide global market share for high profitability as well as sustainability given the chances of attracting many customers. At the moment, the company has most of its operations in the US, Latin America, Canada, Asia, Africa, and United Kingdom (Lobato 2019). The subscribers in the US comprise about 40% of the entire customers and this is attributed to the fact that it is more popular in the country than any other region. The choice of the rest of the areas was informed by the ability to appeal to the potential customers, level of competition, regulations, and the available internet infrastructure among others.
Looking at UK, particularly Ireland, Netflix is performing better than the rest of the countries given available high-speed internet of more than 800kbs per second (Case Study n.p). The country also has many potential subscribers who are informed about the service and how to use it.
Canada also forms a proper market for Netflix services because it has adequate internet supply as well as technological informed clientele (Case Study n.p). The firm also ventured there at a time when there was no competitor, thereby making it popular and also enabling it to acquire many brand loyalists as compared to the firms, such as Amazon, HBO, and Hulu that started operating in the market later.
Latin America also serves as a market, but with unreliable number of customers given the problem of internet connection. Taking Brazil as an example, less than 20% of the population have access to the required internet speed of 800kbs per second to stream Netflix videos (Case Study n.p). Moreover, not all those who can access the required internet would want to use the services. Therefore, the potential customers are relatively few and that makes limits the numbers of people who subscribe to the service in the country.
Asia also offers a large number of potential subscribers given that most of its developed counties, such as Philippines have adequate internet. Furthermore, the countries embrace technology and that helps the firm to readily acquire subscribers upon advertisement.
Finally, Africa is also a potential market though the company is still trying to attract a sustainable number of subscribers (Kabala and Ruan 2018). Internet is a problem, especially in the rural areas, a factor that limits the number of users, but the cities have adequate internet that can enable a substantial viewership.
Competitive Strategies
Netflix’s competitive environment is influenced by other companies and the availability of new entrants into the industry. The threat of substitute products and the powers of suppliers and customers also affect its operations. However, the management is cognizant of the related aspects and has put in place particular strategies to enable compete effectively.
Competition in the Industry
Netflix faces stiff competition in the industry from several firms that include Amazon, HBO, and Hulu among others (Wayne 2018). Therefore, it has limited power to operate and acquire the targeted number of customers.
Nevertheless, the management has initiated several strategies to counter the high level of competition. The firm competes by offering a wide portfolio of products to enable it to attract as many customers as possible (Netflix 2020). For example, it provides a variety of videos that can obtain viewership of different types of people; the young, middle-aged, and the old. Additionally, it operates in various countries from where it creates a substantial chance of obtaining a sustainable number of customers regardless of the level of competition; at least to enable it continue as a going concern. The organization also values popularity and it conducts continuous advertisement through various media including television and social media. This approach has enabled it to improve its popularity and attract those who did not know about it to test the services for a possible subscription.
Potential of New Entrants into the Industry
At the moment, the business does not face potential entrants that can transact in its magnitude (Fleisher and Bensoussan 2015). The business is cost intensive and involves technical technological operations that cannot be readily achieved by new entrepreneurs. Moreover, it involves a lot of regulations that comprise the copyrights and the content to release for viewership; an aspect that further makes it complicated for those who might want to venture into the business.
However, the business still puts strategies to continue benefiting from this situation since it is possible that new entrants, especially the established technology firms such as Facebook, could easily start it if they wanted. Among the tactics used is to sign attractive supply agreements with movie producers to supply their content to Netflix for a relatively long period. Moreover, some of Netflix’s contents are exclusively by the company alone; at least until the agreement exclusivity period ends. That way, the suppliers may find it less attractive to transact with new entrants that may not afford to offer them similar terms of engagement.
Power of Suppliers
The power of suppliers is considerably low because they are many than the firms offering streaming services. Today, there are numerous movie producers, main-stream media stations, and documentary records that serve as sources of content to Netflix and other competitors (Foxman 2020). This scenario minimizes the level of competition because all the competitors can acquire the content that they want and at affordable process.
Despite the minimal competition resulting from the low power of suppliers, Netflix is keen on engaging reliable suppliers that also offer popular content among the target populations. It then enters with them into long-lasting supply relationships that a times bar the vendors from transacting with other video streaming firms.
Power of Customers
Netflix experiences low customer power given that there are numerous customers as compared to the suppliers (Netflix 2020). Both Netflix and the rest can dictate the prices because the subscribers have limited options of similar video streaming companies.
However, Netflix is cautious to charge reasonable prices to make it more attractive than the rest of the businesses. With this tactic, the management aims at attracting more customers than the rest of the companies making them brand loyalists even when the rest of the companies would change their strategies.
Threat of Substitute Products
Netflix faces a high threat of substitute products in the market where it operates. Some of the items include the sale of DVDs by small scale businesses that pick them from producers (Ciccone 2017). The mainstream media the television also offers alternative products by airing movies during off-peak times.
In order to compete against the substitutes, Netflix offers its products at reasonable prices to entice consumers. Moreover, it guarantees reliable watching where the entertainment contents are available throughout, making it possible for people to watch at whatever time. One can even pause a program and watch it later. The management even emphasizes that advantage of watching at one’s convenience in their advertisement. Markedly, it is of more advantage than buying DVDs that can easily get spoilt or watching from the television programs that are set for a particular time.
Products of Netflix
As highlighted earlier, Netflix offers various items that include comedy, action, and videos that depict real life (Netflix, 2020). It also offers documentaries that are meant to inform the viewers of past and present real-life happenings regarding economy, history, politics, and sociology and so on. Additionally, it provides television programs where the subscribers can watch news and other programs at the time of their convenience. Most importantly, the items are varied as per the regions where they operate as they try to offer a lot of local programs to any particular regions as opposed to unpopular foreign content.
Growth Strategies
Diagram 1: Ansoff’s Matrix

From the Ansoff’s above, Netflix has four options for growth strategy. That is, it can decide to undertake market development, diversification, market penetration, and product development (Sivalingam 2018). However, the ideal ones that the company pursues include market development and market penetration.
Market development enables the firm to seek business in new markets using the available products. It is a way of increasing market share to many potential customers like it is currently doing in Africa and Asian countries (Case Study n.p). It is making its services available in those countries and continuously advertising to attract a substantial viewership.
On the other hand, market penetration is exploited in the existing markets using the existing products with the aim of attracting more consumers. At the moment, competition is stiff in some countries, such as UK and Canada where there are many potential consumers (Case Study n.p). Therefore, it is important to focus on this strategy to help gain and maintain a reasonable amount of market share in such lucrative destinations.
Future Netflix Markets
Regardless of where Netflix operates currently, the top three most suitable market destinations that it should pursue include India, China, and United States in order of rank. These choices are influenced by the year 2050 predicted population of 1.7, 1.3, and 0.4 billion respectively (World Stats 2019). Moreover, the nations are also highly technological as shown with the current implementation of internet technology.
Considering that the future is by the year 2050, India ranked as number one, China number two, and United States number three most suitable countries for Netflix market. The countries will be attractive given that they will have the highest population to seek customers from. A large portion of the population will also be comprised of young people of less than 60 years old; those who are considered as the largest group that use internet. Additionally, they all embrace internet technology; an aspect that is likely to increase from the current level. Based on the two aspects, the ranking is justified as per the predicted population sizes.
Looking at Netflix, it has the competitive strength to venture in those firms regardless of the number of firms that could exist at the time. Notably, it is already known and that will enable it to gain more confidence among the potential customers than the other organizations. Additionally, it has a futuristic management that focuses on building a long-lasting firm by adopting new ideas that will keep it relevant into the future regardless of entry of other competitors. Therefore, it will acquire a substantial market share, at least more than the rest of the firm as it currently does because of its appeal to customers in terms of quality, pricing, and convenience.
The market growth rates will also be the same as the average annual population growth rates of the countries which will be 0.7 for India, -0.24 for China, and 0.83 for the US Internet (World Stats 2019). In as much as China’s average population growth rate vis-à-vis the market growth rate will be negative, it will still be leading in absolute numbers because the reduction in population will affect all the competing forms. Besides, the scenario does not make the market less lucrative because the population will still be of absolute advantage than the rest of the countries except for India.
Furthermore, Netflix has also demonstrated a high marketing ability that will enable it to venture in, such highly populated countries and compete favorably against the rest of the firms (Case Study n.p). It has effective marketing team as well as the resources that will enable it to undertake effective marketing.
The competitive conditions could change in the future, but Netflix could remain outstanding. Likely, many firms could join the industry and pricing could be forced downwards, however, Netflix has demonstrated the ability to operate with flexible budgets to attract many customers. The joining of the sector by many customers will also affect it, but that could only lower its market share relative to the rest of the competitors, thereby keeping it as competitive as it is today.
Currently, Netflix positions itself as a convenient, affordable, and high quality company (Netflix 2020). This situation is likely to continue into the future, thus enabling the organization to stay popular and retain a high number of brand loyalists.
Regarding non-controllable market aspects of culture, politics, and the ecological environment, Netflix will get affected. However, it will not experience adverse effects as in the case of other firms. It is already experienced in the field and anticipates such occurrences that it has all the years operate through (Netflix 2020). Moreover, it already has its operations in those regions and occurrence of non-controllable aspects of culture, politics, and ecology will find it resilient enough to continue. For example, new entrants could quit upon new tax increase regulations, but Netflix would stay because already acquired economies of scale.
On quality of distribution services, Netflix is already focused on enhancing consumers’ experience; an aspect that could improve. The firm will likely innovate its activities to fit the changes in consumer expectation and the advancement in technology. Therefore, it will remain competitive in the chosen markets.
Supplier Relationship between Netflix to Amazon Web Service (AWS)
The use of AWS by Netflix has a negative impact on the firm’s international competitive ability (Wenzel, Mahle, and Pätzmann 2016). Given that Amazon is a competitor, there is a high likelihood of obtaining the secrets of Netflix and either copying or countering them given the access to vital information. Amazon could also limit the quality of the cloud computing service offered to Netflix in order to take advantage by making their products suitable in the market. Undoubtedly, Netflix is aware of the same and employs other strategies, such as offering of a variety of products. The tactic will help to counter the problems, however, the fact that it spends part of what it earns in paying for the AWS services also leads to weakening of the absolute advantage from the ability to offer a wide portfolio than Amazon.
The fact that Netflix may not easily switch the cloud computing service’s supplier reduces its ability to compete Amazon (Case Study n.p). For instance, it will change to another provider who would probably charge less than what Amazon charges, thereby increasing its profitability against Amazon.
Since other competitors such as HBO also use the same platform to run their video streaming services, Netflix’s ability to outcompete them in terms of speed and accessibility will be difficult. For example, each firm aims at using the fastest available medium to help attract consumers; but this case will make it impossible to take advantage given the similar medium for running the programs.
Probable Future Strategies
The likely increase in the level of competition from the existing firms as well as those that may join later would push Netflix to adopting additional competitive strategies. The new approaches will be meant to enable the firm to continue enjoying the highest market share as it does at the moment as well as try to increase it for a rise in profitability. Therefore, they have to be focused on attracting and retaining customers.
Firstly, it is possible to increase the current portfolio by adopting more reality shows. At the moment, the available reality shows are restricted to what is available from the televisions whose programs are put in Netflix. However, the firm could later devote it as a service where they seek original publications without acquiring them through television houses. Definitely, this strategy will help the organization to attract and keep those who like watching the same.
Secondly, it is possible that the business will innovate its activities in the future to make them more suitable than now. For example, they could enable the platform to run with less amount of internet speed than it is currently to allow increased access.
Thirdly, Netflix could incorporate local languages by having its website with many language options. This move will be important in enabling those who wish to watch movies to navigate through and acquire what they need. On the same note, they could upload movies that are translated in various dialects for further attraction of different consumers who might just want to watch movies done in particular languages.
Conclusion
Despite being a recent innovation, Netflix and its competitors, such as Amazon and HBO, have made video streaming an important commercial destination for entrepreneurs. Currently, Netflix is operating in various countries, such as US, Latin America, Canada, Asia, Africa, and United Kingdom as a strategy to reach as many potential clients as possible. This wide market has enabled it to stay on top of the competition despite the stiff competition and high threat of substitutes. The management is also focused on maximizing its profitability by taking advantage of the low potential of new entrants, power of suppliers, and power of customers. Moreover, it offers a variety of items that include comedy and action videos among others. Regardless of its current success, it still utilizes market development and market penetration as a way of increasing its market share. In future, India, China, and United States in order of rank, will form the best investment destinations given the high population and implementation of internet technology. Looking into the current situation, the supplier relationship between Netflix and Amazon Web Service is adverse in competing Amazon and others, such as HBO. Nonetheless, other strategies for competition that include increase the current portfolio by adopting more reality shows, innovation, and incorporation of additional languages in its website can still boost its competitive advantage.
References
Case Study (n.p). Netflix.
Ciccone, E., 2017. Platform ecosystem: an analysis of the business model evolution through Blobkbuster and Netflix case studies.
Fleisher, C. S., & Bensoussan, B. E. (2015). Business and competitive analysis: Effective application of new and classic methods. Upper Saddle River, New Jersey : Pearson Education.
Foxman, M., 2020. Ramon Lobato, Netflix Nations: The Geography of Digital Distribution. International Journal of Communication, 14, p.4.
Internet World Stats, 2019. The world population and the top ten
countries with the highest population. https://www.internetworldstats.com/stats8.htm
Kabala, J.S. and Ruan, L., 2018. On Efficiency of AS Paths from Users to Content Servers: A Case Study of Netflix.
Lobato, R., 2019. Netflix nations: The geography of digital distribution. NYU Press.
Netflix, 2020. Frequently asked questions. https://www.netflix.com/ke-en/
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Sivalingam, R. (2018). Strategic Management. Industry Analysis, Strategic Drift and Re-Strategizing. München GRIN Verlag.
Wayne, M.L., 2018. Netflix, Amazon, and branded television content in subscription video on-demand portals. Media, Culture & Society, 40(5), pp.725-741.
Wenzel, P., Mahle, I. and Pätzmann, J.U., 2016. Streaming Services & Service Design: An Analysis of Netflix and Amazon Video Based on the Gap Model by Parasuraman, Berry & Zeithaml. Markenbrand, (5/2016), pp.20-31.