Netflix Five Forces Analysis - Essay Example

Subscribers had the capability of creating their precise list of movies that they browsed and wanted to view. After some time, Netflix Inc. shipped movies on top of the subscribers’ queues by using mail (Thompson, 2012). The company also gave its subscribers personalized ratings on the movies which the customers had rated previously after watching them. By 2008, Netflix had 9.4 million subscribers. In 2009, the company predicted 10.6 to 11.3 million subscribers.

Five forces analysis
The threat of new entrants - High
The company faces a lot of threats from other companies such as Youtube, Amazon, Apple and Hulu. The present competitors have enough money leading to a relatively low barrier. Netflix’s brand identity became weak making many customers unsubscribe.
The threat of substitutes – High
There are other companies such as Apple TV that offer the same services like Netflix Inc.


Bargaining power of customers – High
Many customers are bargaining as there are cheaper and better ways of watching movies. Moreover, these customers do not rely on the company as before.
Bargaining power of suppliers – High
In the Netflix business, content is the main input. There are limited suppliers who have high-quality content and there is no substitute.
The intensity of rivalry – High
There are many players currently offering the same services offered by Netflix. For instance, the cash balance of Apple is 20 times the projected sales of Netflix in 2011 (Thompson, 2012).