The Movie Rental Industry of the Future - Assignment Example

The Movie Rental Industry of the Future An evaluation of the movie rental industry of the future and market forces demonstrates that Netflix has to adapt a new strategy in order to survive and thrive in future. Firstly, technological changes will combine with changes in home viewing habits to make the DVD industry obsolete. As a result, the decision by Netflix to invest in the delivery of DVDs by mail may serve in the short term but is unlikely to serve its long-term interests. The streaming business will do well as internet use in other parts of the world and mobile computing devices increase in the world. It is highly likely that customers will pay per minute for streaming. As a result, it should invest in its streaming services and an online platform (Chapter 3 55). However, it should consider developing features that allow users to view the movies offline. For example, there can be an option for users to download content from the site. Furthermore, industries are being disrupted at an overwhelming pace. As a result, they cannot afford to stick to the present strategy. Instead, it should develop a strategy that is responsive to changes in the market. Q.3 In order for Netflix to achieve more growth and prosperity in the movie rental industry, it needs to change tack on some things. In addition, it also needs to adopt some new strategies so as to prepare itself for the movie rental industry of the future. Firstly, the organization needs to stop relying on established entertainment houses for content. It should focus on creating its own original content. Although the initial cost of investment will be high, the long-term rewards will be phenomenal. In addition, it will enable it to reduce its operating costs by eliminating the licensing fees paid (Chapter 3 151) Secondly, the organization needs to expand into China, Nigeria, India and South Africa. The four countries have an established entertainment industry that would be glad to partner with an organization that gives them a platform to reach more consumers. Thirdly, the organization needs to come up with an appropriate pricing plan that enables them to make a profit on their investment but also makes it possible for price conscious consumer to buy their service. In addition, it needs to establish different packages for consumers. Although the organization stands to benefit from the binge watching culture, it needs to also incorporate real time interaction to enable viewers to interact together as they watch select shows. The move will enable it to prepare for the future where social interaction will be an important component of any form of entertainment. Furthermore, Netflix has to expand the content offered. The move will ensure that it attracts a wider range of consumers. In addition, it should adopt big data in its operations. Big data will enable them to understand consumer behavior which will enable them to develop appropriate and targeted content. Q.4 The organization can position itself for success in the present market and in the future by adopting a five step action plan. Firstly, it needs to establish itself as a source rather than a distributor of entertainment. Although the move will be expensive, it will give it a better standing in the entertainment industry. One of the most significant ways of doing this involves hiring talented and experienced individuals to produce original content. However, the high cost involved means that it should be done in an incremental manner. Secondly, there should be a deliberate effort to test if the Chinese, Nigerian, Chinese and South African markets are viable investments for the organization. The organization can achieve this by hiring a market research firm to do the analysis for them. In addition, it can launch test products for these markets so that it has the data to make an informed decision. Thirdly, the organization should develop a business model that enables them to operate at a lower cost than it is doing now. The move will enable it to pass the benefit to other employees in the form of cheaper and affordable prices. However, it should also consider have a high end product that caters to consumers who want greater variety as well as more choice and control over the products that they get. Fourthly, it needs to collaborate with technology companies in order to formulate a plan that enables them to offer real time interaction on their platform. In addition, it should ensure it builds its big data capabilities by acquiring the appropriate technology. Similarly, it can hire data analysts to build its data capabilities. Lastly, the organization needs to envision the future of entertainment. In order to do so, it will have to understand the current market and the challenges and potential that it has. As a result, the move will provide an opportunity for the organization to disrupt the movie-rental market instead of it waiting for the forces of change. Q.5 Dear Netflix Management, I have evaluated your company and situation, and I would like meet with you to give you a summary of my ideas on how you can keep your company competitive in the future: Here is a summary of my recommendations: The organization needs to adapt a pricing model that reflects an understanding of the prevailing economic climate and the need to drive mass-market adoption. As a result, it needs to create multiple products that will enable them to cater to the high end market and the low end market. The organization needs to invest in its own content creation capacity as opposed to relying on entertainment houses. For example, it can provide a platform for select independent producers to market their movies. The organization needs to prepare for the inevitable increase in mobile computing devices. Consequently, the organization should develop an application or a website that provides an optimal mobile experience. In the future, many individuals will be consuming entertainment through their mobile devices as opposed to the television. The organization cannot rely on the American and European market alone. On the contrary, it needs to expand into large markets with a large middle class that can afford subscription fees for entertainment products. In addition, they have to target markets with a lot of young people since they are the most likely to be predisposed to binge consumption. For example, the Indian market has an established Bollywood industry. If Netflix collaborates with established entertainment companies to offer their content in India, it will have captured one of the most populated countries with an emerging economy. A rising middle class characterizes the country. However, for the move to be a success in the long-term, it should be accompanied by an investment in creating original content for the Indian market. Thank you and I look forward to discussing these ideas in more detail in person. Works Cited Chapter 3. Evaluating a company’s external environment. ND. Print Read More