Quantitative Methods - Qflix Inc - Case Study Example

Name: Tutor: Course: Date: Qflix Qflix Inc. is a movie rental service based company based in the U.S. the company was founded in 1997, by Reed Hastings. The company did not, however, begin its movie rental service up until 1999. The company practices a subscription based business model, where customer are required to pay a certain amount of money which is specific for a particular subscription. The DVD(s) are then mailed to the customer and are expected to be returned once the customer is done watching them. The company has since morphed and incorporated the Internet into its business model. Today, the company offers streaming services along with its original DVD-by-mail service. It is the largest business that offers subscription-based streaming of movies and series in the world today. The company became so successful that by 2011, it was fully operational in 43 different countries globally (Qflix 2015). There are some different companies that offer similar services to Qflix. Ensuring that there is a competitive edge maintained by the company is, therefore, a priority that cannot forgo. There is a very tight competition between the different service providers; two of the most significant threats are the existing Pay-Tv distributors, who offer the same products to customers in the country. These companies offer the same services to consumer markets, actively affecting the profits of Qflix. The second rival competitor as tech companies. These two entities are in a better position to license their products. In addition to this, they are at liberty to do this on a wider scale (Valuation Academy 2015). The threat of new service providers to flood the market is among the most significant drivers that the company has leveraged to improve its productivity. The company deals in an industry whose major barrier to entry is the capital. It is very tasking to afford quality content for any company looking to break into the streaming service market. This, however, has not been a problem for quite some companies. This being the case, companies like YouTube have experienced very little strain when it comes to content. Artists and producers are encouraged to advertise their productions through the website. Qflix has fallen behind as far as brand identity is concerned. This means that they are less and fewer customers looking to subscribe from the company (Valuation Academy 2015). The bargaining power that the suppliers who provide services for the company also reduce or increase the profit margin that the company gets. The suppliers who provide content are very important entities to the business. In an age where there are quite some suppliers, there is much substandard content that is being produced on a daily basis. In addition to this, there are quite a number of companies who provide platforms similar to that of Qflix at a better price. All these factors are considered when it comes to the stand that suppliers take as they produce the content. Suppliers, therefore, look for the best licensing deals. This improves their bargaining power and limits that of the company looking to sell its content (Valuation Academy 2015). The company bases the profit that it makes on the sale of as many subscriptions as possible. The bargaining power of the buyers, therefore, an important asset to them as it influences the price that the company sets for every subscription. The bargaining power of the buyers is also very high. This is because there are quite some companies and several companies that deal in the same industry as Qflix. Customers are therefore not as loyal to the business as they initially were. The avenues that are present to access the content that Qflix sells are so many that is it becoming increasingly more economical to use them as opposed to subscriptions. This has a very significant effect on the revenue of Qflix as the company relies on the sales to make a profit (Valuation Academy 2015). Another factor that is looked into that determines the success or failure of a company is the alternative producers of similar products. If there is a less costly and equally good product in the market, the customer tends towards moving their business to other companies. The industry that Qflix Inc. operates on has quite some competitors who have specialized in different areas that the business has set up. Apple TV, Amazon on Demand and Hulu are examples of companies that have entered the market and have done this in a very strategic way. These companies offer equally good content and have a wider market reach as compared to Qflix. This means that as the company grows into other countries, there are some states where they are considered as new market entries. In addition to this, the competitors have worked towards producing a better video on demand experience for customers making them an equally attractive producer (Valuation Academy 2015). The five porter forces Models all work to evaluate the potential productivity of a company based on these five factors. Rivalry among competing firms creates a competitive atmosphere in which the rival companies have enough incentive to operate optimally. The threat of new entrants in any industry offers a reflective opportunity for any company. Companies in any industry are likely to reevaluate their products and cross reference them with the products of the new entrants. The bargaining power of both suppliers and buyers have a direct correlation with the revenue that a company makes. Lastly, the threat of substitute products limits the sales that a company makes. It, therefore, calls for the company to make certain changes to improve its market share (Porter 2008). Several areas put Qflix ahead in the entertainment industry. For one, the service is primarily web based. This means that it can be accessible to persons across the world given they have access to the internet. While online streaming services are a manifestation of telecommunication services into difference media houses, the full potential for online streaming services had been grossly under-exploited for the better part of the company’s lifespan. It is important to note that while Qflix began their online streaming service before most media houses, they had not expanded their operations to include a global approach from the onset. This was one of the major deficiencies that the company operated with for a long time. Technological advancements have challenged traditional means of communication and transformed different industries including communication and modern entertainment. While the company had failed to expand their service range to all countries, the company had fans already streaming into the shows on Qflix before it was legally accessible to them. With this, the very benefit of having an online service is seen. Internet buzz on the shows and services of Qflix spread given the company a competitive advantage from the beginning The expansion of the service to Australia is perhaps one of the most prolific market entries in online in the online streaming service industry. In fact, statistics indicate that over half of all of the other competitors of Qflix, like Stan and Quickflix, are also subscribed to Qflix for a trial service. An even more interesting point is that these people often binge watch the shows on Qflix before actively subscribing to a monthly service. Qflix is without a doubt a doubt an industry leader. The streaming video on Demand (SVoD) can attribute the majority of the market share to Qflix. Before the service was officially launched in Australia, the company had received an approximate number of200000 users who had other means of access. By the end of their release, the number had doubled to 400000 registered users. This is a testament to the market dominance that the company enjoys in Australia. When compared with the other services that the company is significantly advantaged in the Australian Market. For example, Presto is one of the company’s most aggressive competitors of Qflix. The company launched their online streaming service in January 2015 and scheduled to have the movie streaming service up and running all at the beginning of May, in the same year. It is important to point out that although the company has been quick to react, regarding material and service, they had registered 97000 subscribers by the end of May in 2015. This is still significantly lower compared to the numbers that their rivals, Qflix pulled in the same year. One of the most beneficial strategies that the company has come to manipulate is the pricing strategy of the company. While online streaming services are considered a luxury that must be charged in the same breath as its perceived value, the company maintains a customer friendly price of 8 dollars per month normal subscription. This is another important advantage that the company has. Being able to finance their systems and tools at such a price is another added benefit that Qflix as a company has been able to exploit immensely. This may in fact be the determinant reason that continues to tip the scales in the company’s favor. One of the most significant players that have proved to be an international player is Amazon Prime. The company has similar experience and history to that of Qflix. It is, therefore, important to note that the differences in the way that these companies relate affect the global market more than any other players. The differences in the two companies are majorly noted in the company, pricing and the services that they provide. In general, Amazon has a more consistent and trusted service. However, Qflix is known to have one of the largest collections of Movies and TV shows. In addition to this, Qflix is relatively cheaper compared to Amazon Prime. The screenshot below is a tabular comparison of the two services back to back. The target customers of the company come down to three major categories. These are persons looking to gain access to better quality streaming services. Persons looking to have access to service providers that have a better selection of DVD and lastly those that are looking to enjoy all the benefits and conveniences that come with rented DVDs delivered right to their home. With all these three factors considered in the market plan for Qflix, the company has managed to climb to the top of the tree as far as the service industry is concerned. In Australia access to top quality, performance has increased since the market entry of Qflix. Over all the consistency and the continued determination of the company is the key to its global success. With hit series like Orange is the New Black and House of Cards among others, Qflix will without a doubt grow into one of the most productive companies of the twenty first century. Their unique internet marketing strategy, brand campaign, quality of service are just a few markers that allow the company to continually capture new markets. In fact, by February 2016, the company had increased the subscription range to over two hundred countries internationally. This is a very important move as it has allowed the company to experience the same benefits they did n Australia across the world. Work Cited. Qflix. Qflix.com. Overview. From http://ir.Qflix.com/. 2015. Online. Porter, M. Harvard Business review. The Five Competitive Forces that Shape Strategy. From https://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy. 2008. Online. Valuation Academy. Valuationacademy.com. Porter Five Strategies- Bargaining Power of Suppliers. From http://valuationacademy.com/bargaining-power-of-suppliers. 2015. Online. Valuation Academy. ValuationAcademy.com. Porter Five Strategies- Bargaining Power of Buyers. From http://valuationacademy.com/bargaining-power-of-buyers. 2015. Online. Valuation Academy. Valuationacademy.com. Porter Five Strategies- Threat of New Entrants. From http://valuationacademy.com/threat-of-new-entrants. 2015. Online. Valuation Academy. Valuationacademy.com Porter Five Strategies- Bargaining Power of Suppliers. From http://valuationacademy.com/competitive-rivalry-among-excisting-firms. 2015. Online. Valuation Academy. Valuationacademy.com. Porter Five Strategies- Bargaining Power of Suppliers. From http://valuationacademy.com/threat-of-substitute-products-or-services. 2015. Online. Read More