Swot Analysis of Netflix
SWOT analysis for Netflix: Strengths: 1. Proprietary technology. Netflix has proprietary technology system to stream TV shows and movies and also including processing delivery and return DVDs.
This specific system makes the business in Netflix more efficiency. 2. Goodwill and brand value. Netflix is a company with reputation. It has 15 years experiences and has a good deal of loyal consumers. 3. Competitive price. The service is in expensive in Netflix. It just cost 8 dollar per month and subscribers can enjoy unlimited viewing. 4. Simple service process.
The service process in Netflix is simple. There are no commercials, no commitments, no contracts which can save consumer’s time and make the service more efficiency. 5. Open-minded managers. They continuously receive feedback from their consumers to change their strategy which makes the company more profitable and prevent many risks. 6. Good user experience. With just a little bit of timing, customers can have movies coming and going so as to almost always have a movie ready to watch. Which generating loyal and enthusiastic customers. Weakness: 1.
Third-party logistics or third-party device. Netflix have to rely on third-party logistics or third-party device, which mean if consumers lose confident with US mail system or some devices company, it will have bad effect on the reputation of Netflix. 2. Laws and government regulations. As an industry rely on internet, Netflix has to keep continual attention to laws and government regulations and make a quick reaction if something changed. 3. Pricing power. It has to accept the rates and delivery schedules set by the U. S. postal service, as well as the rates set by streaming providers. . Weak of internet system. As the main service of Netflix is completed on internet, there has the chance that the system to be attacked by hacker and it will bring tremendous negative effect on Netflix. 5. Debts. Netflix have issued $400 million in debt offerings and may incur additional debt in the future, which may adversely affect their financial condition and future financial results. 6. Content distribution. These are not exclusive, which allowing competitors access to the same movies and television shows, leaving the way open for competition. Opportunities 1.
Branding value. Netflix can become the first thing people think of for watching movies at home, just like “Google” is the first thing many think of for searching. There’s been at least one instance of using the word “Netflix” as a verb, so this could be the beginning. 2. Technology changing. As the technology changing fast, Netflix can use continuously strategy changing to take the first mover advantage. 3. The big and increasing market. There have over 30 million members in over 50 countries enjoying over a billion hours of TV show and movies from Netflix every month.
As the market is still increasing, there has a big opportunity for Netflix. 4. International expanding. As Netflix will expanding its domain outside United States, it will face many opportunities and challenges. 5. Distribution. As more subscribers come aboard, the value of Netflix as a distributor of content for studios goes up, leading to more pricing power for Netflix and less for the content producers. Threats 1. Competitors. That existing or new competitor in the same domain, for example Google,
YouTube and Amazon is the next most serious threat after Hulu. 2. Free ad-supported TV shows and movies. If large market segment bring for this kind of free TV shows and movies, the rate of growth in Netflix could be decline. 3. The liability for negligence, copyright or patent. Face the potential liability for content uploaded from their users. Netflix have the possible to be litigation if their consumers upload some videos illegal, which will cost Netflix a lot and will have negative results of their operation work. 4. The Copyright law change. If U.
S. Copyright law were altered to amend or eliminate the First Sale Doctrine or if studios were to release or distribute titles on DVD in a manner that attempts to circumvent or limit the effects of the First Sale Doctrine, their business could be adversely affected. 5. Increasingly cost of their acquisition of DVD content and the logistic company. They are unable to negotiate with the studios because of consumers have lists and they have to buy the movies on the list. As labors cost more and more expensive the delivery DVDs cost is increasing. Risk 1.
If Netflix efforts to attract and retain subscribers are not successful, their business will be adversely affected. 2. If Netflix unable to successfully or profitably compete with current and new competitors, programs and technologies, their business will be adversely affected, and they may not be able to increase or maintain market share, revenues or profitability. 3. If Netflix are unable to continue to recover from the negative consumer reaction to their price change and other announcements made during the third quarter of 2011, their business will be adversely affected. . If Netflix cannot foresee the consumer viewing habits exactly maybe it will make some wrong strategy and have adversely affected. 5. Many of their systems and operational practices were implemented when Netflix at a smaller scale of operations and they are undertaking efforts to migrate the vast majority of their systems to cloud-based processors. If they are not able to manage the growing complexity of their business, including improving, refining or revising our systems and operational practices, their business may be adversely affected. . The big portion of goodwill in its total asset is also a risk. If they cannot provide good service and make consumers satisfied, it will suffer a very bad influence for its profit. If they are unable to protect their domain names, their reputation and brand could be adversely affected. 7. Delayed availability of new release DVDs for rental could adversely affect Netflix’s business. In January 2012, Warner Home Entertainment announced it was increasing the period of delay to fifty-six days.
If other studios were to increase the period of delay and /or if their subscriber satisfaction is negatively impacted by this increase in the Warner delay, their business could be adversely impacted. 8. Proprietary technology to stream TV shows and movies and to manage other aspects of their operations, including processing delivery and return of their DVDs to their subscribers, and the failure of this technology to operate effectively could adversely affect their business. . In the event of an earthquake or other natural or man-made disaster, Netflix’s operations could be adversely affected. They may not be able to effectively shift their fulfillment and delivery operations to handle disruptions in service arising from these events. 10. They could be subject to economic, political, regulatory and other risks arising from their international operations. 11. They may lose key employees or may be unable to hire qualified employees.