Netflix SWOT Analysis Summary
Abstract
There are many ethical issues that may arise when managers develop a system of organization within a diverse workforce. One of the most important areas of concern is the inclusion of diversity that respects every employee’s input, including differences in perspective and the ways that these differences may improve the team member approach. In the 21st century, these ideas have become increasingly important at every level of business management. Managers have a central role in leading the team together in a shared purpose of social responsibility and strengthening the reputation of the company as a whole. This approach provides a more cohesive system of meaning that can lead to higher rewards as each person is encouraged to share ideas from diverse points of view. At Netflix, which is rapidly becoming a very important international enterprise as they expand their business concerns to many regions of the globe, these objectives are central for the position of managers.
Netflix SWOT Analysis Summary
Netflix is an American multinational corporation that offers a subscription-based video-on-demand service for customers to bypass the waiting period for watching television shows and films, as well as produces original programming of its own. Beginning as a company focused on DVD rentals, the company deviated in order to capitalize on the boom of streaming media. The company is now worth more than $19 billion in assets and has a total equity of nearly $4 billion (Canady, 2017), creating great financial and economic strength for the company. There has been a consumer move away from traditional programming in favor of viewing shows in totality whenever possible rather than dealing with advertisements and the like. Its primary strengths are in numbers and its connectivity, which creates ease of use for consumers. Its connection system includes several devices like computers, laptops, mobile phones, televisions and tablets, all aimed at increase ease to access of its content; this creates an increasing loyal consumer base as well.
Although Netflix is a multinational corporation that services customers’ media programming needs worldwide, one of its major weaknesses is market regulations within other countries that limit its profitability and ability to reach more consumers. High programming costs, censorship and other sociocultural factors, as well as high global unemployment and inflation that weaken its reach and impact. As most companies hope to do, Netflix has looked into international expansion, yet the conditions and regulations of various countries makes that difficult. There are significantly more risks of loss than gain when it comes to expanding for Netflix, especially into European markets. New laws on higher Value Added Tax (VAT) impact consumers, whose subscription costs would likely go up as Netflix must pay a tax to distribute its services. Different nation’s laws and regulations great limit its profitability. In recent years, the company has lost more than hundreds of millions of dollars (Frey, 2015). Netflix is also weakened by declining memberships of its DVD section, which appears to be needless as consumers have access to its main platform of programming without the use of an addiction electronic device.
Netflix is currently the United States’ top streaming service with more than 100 million subscribers. Despite its success, there are still opportunities for growth which can enable it to stave off media competition and increase its values amongst much larger conglomerate challengers like Hulu, Amazon, Disney and 21st Century Fox. One opportunity is for Netflix to use its cultural power and media platform to speak out against the recent repeal of net neutrality rules, which the company had long opposed (Feldman, 2017). The repeal was made official in June 2018 and as Netflix continues to speak out against it in addition to the general public’s dismay, it shows the public that the company is committed to corporate social responsibility and free use of the Internet. Although it drives its bottom line ultimately, it also makes the service continually available to its customers who value the service greatly. Another opportunity is introducing new types of content, like podcasts, to present a new form of storytelling to the consumer. Podcasts like Serial have been making waves among media consumers and it is a way to increase subscribers, especially if paired with shows that are on true crime, many of which Netflix. Netflix can add to the conversation and create more of it as well as the first programming producer to do so (for free with subscriptions). This also makes Netflix a formidable competitor with Stitcher and Apple’s podcasts.
Netflix also faces significant threats to its streaming services, particularly from competitors such as traditional television, DVR, Amazon Prime Video, Hulu and more, as well as decreased offerings from media distributors. At its outset, Netflix was the only company offering this service compared to its competitors now, creating for it a period of long-term financial and economic growth. Netflix gave consumers a new way to consume movies and television on demand when they wanted it, including the option to watch an entire season (or season’s) worth of television, otherwise known as “binge-watching.” Now, Netflix has inadvertently created an on-demand subscription model that the likes of Hulu and Amazon have created their own of. Netflix is no longer unique to the industry, especially considering that some of its competitors have their own original programming as Netflix does itself. All of these companies are vying for the attention of streaming services, making the most significant threat to Netflix.
Netflix’s media content offerings also create a threat to its business in the coming years. With major media conglomerates like Disney and Fox merging, there is the possibility of new streaming services to enter the market, which means that film and TV studios may withhold their intellectual property rights from Netflix to host their won programming. Netflix’s original programming, though, makes up a small portion of its offerings and it relies on making deals with publishers to offer media to consumers. If rivals continue to enter the market and Netflix loses programming, many subscribers will be forced to choose—if Netflix’s prices increase or change in any way, they may get left behind.
The ways in which Netflix could turn its opportunities and weaknesses into strengths is through adapting and continuing to satisfy consumers. In a very media-heavy and technological age, consumers have a plethora of options to choose from—and be overwhelmed by. Creating options and inclusiveness, as well as standing up for what the company believes in like net neutrality, consumers will become interested in and foster a sense of loyalty to the company.
References
Canady, V. (2017). Netflix series prompts need for conversation, information. Mental Health Weekly, 27(17), 4-6. doi: 10.1002/mhw.31018
Feldman, B. (2017). Without net neutrality, what happens to my Netflix? New York Magazine.
Frey, M. (2015). Netflix Crit in the Twenty-First Century. Film Criticism, 40(1), 119-188. doi: 10.3998/fc.13761232.0040.111
McDonald, K. (2016). The Netflix Effect: Technology and Entertainment in the 21st Century. Bloomsbury Publishing USA.