Read “Exemplary Company Showcased: Netflix, Inc. (NFLX)” on page 90 of your course textbook. As you read, pay close attention to Netflix’s strategy, and write a case study describing the points listed below.
- What are Netflix’s internal strengths and weaknesses?
- Who are Netflix’s competitors?
- Do you see Netflix’s strategy as effective or ineffective? Why?
Your case study must be at least one page in length, not counting a title page and reference page. Outside sources are not a requirement for this case study, but if you choose to use them, they must be cited and referenced according to APA standards.
Based in Los Gatos, California, Netflix does an outstanding job analyzing customer buying trends and desires and incorporating that information into its strategic-planning process. Netflix gathers extensive information about its customers’ usage and content choices, utilizing voluminous individual data into strategic information. An analyst for Janney Capital Markets recently said, “Netflix understands its viewers by tracking every single thing they do; and develops patterns among its subscribers, and matches them up properly with content offerings.” Doing such an excellent job with customer analysis has enabled Netflix to reportedly obtain one-third of all Internet prime-time traffic in the United States. Lately, the company’s streaming video services are focusing more on popular TV shows and less on hit movies. Netflix now has 32 percent of the top 75 TV shows from the past 4 years, compared to Amazon’s 12 percent, but Amazon is actively promoting its Prime Instant Video service that competes with Netflix. In early 2015, Netflix’s stock surged 42 percent in a single day to a 52-week high over $500. Analysts expect Netflix’s addressable subscriber base to reach 207 million globally by 2017, as the company grows rapidly across Europe and beyond. Netflix recently entered six European countries: Germany, France, Austria, Switzerland, Belgium, and Luxembourg—after already providing services in the U.K., Ireland, Netherlands, and Scandinavia. Netflix entered Australia and New Zealand in March 2015, followed by Italy, Portugal, Spain, and Japan in October 2015.
Netflix’s stock is expected to split in late 2015 for only the second time in the company’s 13-year history. With Netflix stock currently being almost $700 per share, a lowered split stock price is expected to widen the pool of people interested in buying the stock, which has been soaring throughout both 2014 and 2015. As of April 1, 2015, Netflix had 20.9 million international subscribers and 41.4 million streaming subscribers in the United States.