Netflix: Can It Succeed in the UK? Case Study Example

Technological development has advanced at a fast pace as demonstrated by the video-on-demand craze that has taken the world by storm in recent times. This technology involves merging pay-per-view programming with internet downloading. Netflix, a DVD rental company based on online subscriptions went a mile further and introduced renting of videos online. This was a first because the other competitors in the market all stuck to retail rentals and were caught by surprise. This strategy sabotaged the core competencies of Netflix’s incumbent competitors and forced them to its lead.

This case study analyses the first problem encountered by Netflix: the making of the decision regarding the entry mode of joining the video on demand market. A SWOT analysis on Netflix shows how it survives in the murky waters that is the video industry. This industry has complex uncertainties that make any kind of competitive advantage unsustainable. One of the strengths of the business model employed by Netflix currently include the policy that ensures no extra fee charged for late subscription payment (Netflix Case Study, 2012). The other is the recommendation system where the customer receives recommendations of videos based on their preferences while also informing them of the availability of the same. Their main weakness however remains the inability to provide instant delivery of DVDs like regular movie stores. One great opportunity that Netflix can capitalize on is creating leverage on the numerous strengths it has currently like brand, large market share as well as the recommendation system. Netflix faces one major threat however; the amount of capital required to enter the video on demand market is humongous despite the fact that it is still relatively young.

There are a few recommendations for Netflix derived from this analysis. It should form an agreement with cable service providers, albeit a short term one. This kind of arrangement will enable the company to avoid the risk of having redundant long term licensing agreements. Such redundancy is highly likely if technology experts finally manage to create a connection between computers and television sets. They are also given the time to build their own infrastructure layout while still using that of the cable company as well as its network. The use of the cable network enables Netflix to gain quick penetration in the video on demand market through the use of the cable network infrastructure.

Reference

Netflix Case Study Can it Succeed in the UK?.. (2012). S.l.: Datamonitor Plc.