SWOT Analysis
Strengths of Netflix
Strong market position
Multi-platform streaming
Track record of building successful partnerships
Ownership of original programming
No ads in its programs
Weaknesses of Netflix
Competitor Redbox has made significant inroads to Netflix’s DVD rental market.
The Netflix service is dependent on outside providers of streaming hardware and internet services in order to reach its customers.
Opportunities for Netflix
Competitors of streaming entertainment are more expensive (Amazon Prime), have ads (Hulu), or are available only over a single platform (Apple). Netflix could make an issue of this in its marketing materials.
There may be markets for different programming via streaming, such as a wider array of documentaries, foreign films, and older, genre-specific offerings.
Threats
Intense and ever-increasing competition.
Rapidly changing technology.
Issue Identification, Ranked According to Importance
Intense competition in the industry — A great deal of attention must be devoted to staying ahead of competitors, especially copycats.
Market saturation — Most parts of the online market are already reached by Netflix or one of its competitors. There is not a lot of room to grow.
Dependence on internet service providers to distribute its content.
Rapidly changing digital and communications technology— This is an increasing hazard of all businesses, so ranked last.
Recommendations
Short-term
Netflix should continue to produce proprietary programming at a high level of quality. This has put them in the forefront of the market and should continue to keep them there in the short term, even though competitors are now doing similar content production.
Netflix should begin to offer streaming content for niche markets. Target audiences might include people who want more documentaries or programs in languages other than English. An advantage here is that Netflix may already own the rights to older content through its DVD service.
Netflix must make strenuous efforts to stay very, very current with the latest technologies. The first player in a field is usually the strongest, so Netflix can maintain an advantage by being first.
Long-term
Netflix should pay close attention to its bottom line and do everything possible to maintain low monthly subscription fees. It is already far cheaper than Amazon and is offered at a competitive price relative to Hulu, which has ads. A reasonable argument can be made that the ads on Hulu effectively constitute a higher price.
Netflix should seriously investigate a partnership with, or the purchase of, an internet service provider so that it can control access to its programming by its customers.
An additional advantage of a partnership with an internet service provider is that Netflix can then negotiate temporary internet access to customers when they are traveling and on vacation. Cable companies do this and it is a very attractive, free benefit to cable customers. This tactic could undermine the advantage that Redbox has, since people who are traveling can use their Redbox membership at any Redbox kiosk in most tourist spots.
