I need help getting a paper started Pages double spaced. You can rent videos from local video rental stores, you can order pay-per-view from the comfort of your own home, and you can rent videos from the Web at such sites as NetFlix. Is buyer power low or high? Is supplier power low or high?
NFLX is the king of streaming video. However, almost one-third of these households subscribe to more than one video streaming service, such as Amazon Prime or rival Hulu. Most people can afford to have all the video streaming service subscriptions they want, so what keeps Netflix at the top?
This is the bargaining power of buyers, one of the five forces of competition identified in by Michael E. Porter, a Harvard Business School professor. The Five Forces analysis framework he developed is still used in It also includes the threat of substitutes, the rivalry between competitors, the bargaining power of suppliers and the threat of new entrants.
Switching Costs One of the biggest issues Netflix faces is the cost of switching services is so easy. There is no annual contract, and the cost of signing up for service is minimal. Also, most video streaming service providers offer a free trial. It is easy for customers to subscribe to one streaming video service one month, and then switch the next.
Netflix has to make sure its selection is compelling enough for subscribers to justify keeping the service year-round. Video Preferences Netflix also has to address video preferences. The company already charges a premium for its HD service. However, Netflix has to continue to build that number if it is going to compete against some of the newer entrants.
Viewer Preferences In addition to format preferences, Netflix also has to keep viewer preferences in mind. This includes securing the ability to stream the content viewers want in addition to some of the added viewing features, such as closed captioning and foreign languages.
Netflix offers closed captioning and some foreign language options, but the usefulness of these features is limited by the streaming device the viewer uses. Movie and TV Show Selection Netflix subscribers also have bargaining power concerning movie and television show title selection.
As video streaming has become more popular, the number of new entrants has also increased. However, instead of taking Netflix head on, new entrants are taking on genres.
For example, streaming video service Fandor has more cinematic films. It specializes in foreign movies, independent films and documentaries, as well as cinema classics such as movies from the Criterion Collection.
Netflix has to offer films that appeal to these viewers if it is going to compete in these niche spaces. Otherwise, some subscribers may jump ship. Refining the Brand Netflix customers can bargain on the brand. To compete, Netflix has to refine its brand to appeal to a broad range of consumers.
Similarly, Netflix has to ensure its brand works. Part of this is making sure the technology behind its streaming service works well, but the company also has to make sure people can relate to the brand in other ways, like how they search for titles to watch.A Porter’s Five Forces Analysis of Netflix By: Shannon Szabo-Pickering Throughit innovative distributionmethodsfordeliveringmoviesandtelevisionshowsandintuitio.
While social media doesn’t shift Porter’s model, the social era surely does. Big Isn’t Enough This is the third part of a series on what it takes to win in the social era: being fast, fluid.
Porter's Five Forces Threat of Rivalry Supplier Power Buyer Power Threat of Substitutes Threat of New Entrants Netflix must delay the streaming of newly released movies for 28 days, causing impatient customers to purchase from stores rather than waiting to stream the movie.
If you have a model for thinking about competition, it’s easier to understand what’s happening and to think creatively about possible solutions. One of the most popular frameworks for examining a firm’s competitive environment is Porter’s five forces Also known as Industry and Competitive Analysis.
The five forces model was developed by Michael E. Porter to help companies assess the nature of an industry’s competitiveness and develop corporate strategies accordingly.
The framework allows a business to identify and analyze the important forces that determine the profitability of an industry. Porter's Five Forces Analysis is an important tool for understanding the forces that shape competition within an industry.
It is also useful for helping you to adjust your strategy to suit your competitive environment, and to improve your potential profit.