Netflix Company Analysis, Value Chain Analysis and Identification of Its It Techniques - Essay Example

? Netflix Company Analysis, Value Chain Analysis and Identification of its IT Techniques and How they provide it with a Competitive Edge University: Course: Tutor: Date: Netflix Company Analysis Neflix is essentially the global internet television network industry leader and offers a subscription to all its interested customers across the globe. Netflix’s Earnings per share have been recorded at 46.6% which is about almost twice the industry average. The company has managed to establish a consumer base of an estimated over 40 million users in addition to its creating huge brand recognition. The company’s consumer base which is spread out across over 41 different countries is seen to enjoy over one billion hours of movies and TV shows every months including access to a large number of original series (Carr, 2011). Netflix is seen to essentially operate in three different segments which include: Domestic streaming, Domestic DVD and International streaming. While its domestic and international streaming derives revenue for the company by the collection of revenue from the various monthly subscriptions paid by the customers for streaming content, its domestic segment derives revenue from monthly DVD-by-mail subscriptions. The company’s content is delivered to its users over the internet through various connected devices such as personal computers, Macs, Blue-ray players, play stations, home theatre systems and Internet video players. The company’s revenue growth is estimated at about 32.9% which has been found to be about thrice the current home video industry as a whole. By charging monthly subscription fees that are at times as low as $7.99 for unlimited monthly subscription (Carr, 2011), and having no late fees, Netflix is able to account for an estimated 90% of all online DVD rentals in the United States and about 3-5 percent for all the county’s home video rentals. Netflix is seen to have developed a good relationships with the USPS, a factor that has served in helping it establish a relatively strong position for its VOD service as USPS is now able to deliver video’s to the customer’s customers within one business day. Some of Netflix’s direct competitive imitator is seen to be Blockbuster which essentially copied Netflix’s online VOD concept after it started losing its market share to Netflix (Shih, 2007). Netflix has put in place a number of cost management measures that serve in helping the company effectively balance the declining rental costs, some of these measures include: the company’s use of up to date technology, and its provision of adequate convenience to customers all serve to greatly aid against its competitors. Netflix Value chain Analysis Inbond Logistics: The Netflix has been able to sign a deal with Time Warner Bros. that in addition to extending its movie title licensing from the studio will also serve to add more TV shows to Netflix library. Netflix is seen to have greatly standardized its physical distribution method by using USPS to easily distribute DVD’s across the country. Operations: Netflix has several factory centers across the United States that manage the distribution of its television programs and movies. To distribute its DVD movies, the company is seen to first purchase them and then package each DVD into a red folder which is clearly labeled with the company’s logo. Netflix also ensures that it maintains good quality titles for physical distribution in addition to providing all its customers with quality customer care. The company offers its customers a limitless inventory and is continuously expanding its bandwidth so as to continue offering its customer’s seamless move and TV shows streaming. Outbound Logistics: Netflix is seen to be focused on attempting to build more partnerships with the various movie producing companies so as to be able to add more titles to their ever expanding library. This is aimed at providing their customers with more DVDs more quickly. The constant availability of new movie titles and TV shows is seen to ensure that Netflix product offering is generally secure and not affected by any seasonality (Chang, 2013). Sales and Marketing: Netflix is seen to have managed to establish itself as a trusted and well known international brand with a well known product offering. In addition to placing commercials on newspapers, televisions and magazines, Netflix is also seen to buy advertising space on different websites to advertise itself. Netflix also benefits from word of mouth marketing which is seen to be a relatively low cost advertising model (Zhou, 2013). Service: Netflix focus on service provision is seen in its free physical shipping of various television and movie titles to its DVD-by-mail subscribers. Netflix also provides instantaneous DL streaming content for its customers onto their various internet connected household devices. Quality customer service is also seen to be another key aspect of Netflix service offering as customers are able to access the care quite easily both online and via the use of phone. Netflix is also seen to be a convenient system as customers can be able to easily browse the company’s library, and be able to easily select movie and television titles from the comfort of their homes. Netflix excellent service provision provides the company with a crucial competitive edge. Netflix Use of IT Techniques and Implementation and How they Give the Company a Competitive Advantage Netflix continues to place itself a market leader in the video rental industry by its constant experimentation with various technological advances with the aim of attempting to try and improve its customer experience. Netflix offers its customers a number of various IT based tools designed to optimize their view experience. These tools are seen to variously include Netpivot, Hacking Netflix, DVD later and FeedFliks (Broida, 2011). The use of tools such as DVD later that allow the customer to catalogue a movie that they would like to watch on a later occasion; and Feedfliks a tool that enables users analyze their rental usage and establish how many movies they have been able to watch on their current rental plan so as to calculate their average cost per movie, is seen to greatly aid Netflix as it improves the company’s customer satisfaction which subsequently results in increased competitive advantage. The company has moved to open-source a large number of the tools it has developed internally for use in running its video streaming. This move is seen to have helped the company gain a competitive edge as its tools are now available for modification and betterment by numerous developers across the world. The use of the modified tools is seen to subsequently result in causing the company to gain a competitive advantage via the use of these modified tools in its systems. Netflix has been termed as being the poster child of cloud computing as it ably demonstrates both the immense benefits of the use of the technology as well as the minor disadvantages. Netflix is also seen to be creating a cadre of developers who are primarily experts in the management of various cloud deployments. These experts arisen to also actively be engaged in making advances that cause further advances the running of large-scale cloud deployments. Cloud computing is also seen to enable Netflix to be able to offer better security as compared to that which is seen to be offered by its competitors. By doing this Netflix is seen to gain a further competitive edge over as it is able to better secure important user data as compared to its various competitors (Chang, 2013). Some of the other benefits that cause Netflix to gain a competitive edge as a result of its use of cloud computing include the fact that the company is able to greatly reduce its spending on the various technological infrastructure, it now requires less personnel to be able to effectively run its systems in addition to greatly improving the accessibility of the movies and DVDs it offers to its customers. References Carr, A. (2011). Netflix: What we've got here is a failure to communicate? P.1. Retrieved from http://www.fastcompany.com/1781162/netflix-what-weve-got-here-failure -communicate netflix. 2013. Accessed on 14 Dec, 2013 from http://ir.netflix.com/ Shih. 2007.Netflix. Harvard Business Review. 9-607-138. Rev: November 19, 2007. Chang, B.Y., Anggulefang, C. (2013). The Way to Innovation. Retrieved from http://www.hbrchina.org/2013-09-27/113354919.html Zhou, J. C., Meng, S. L. (2013). The Application of Big Data Have Been Upgraded. Retrieved from http://www.hbrchina.org/2013-09-04/113256660.html Broida, R. (2011). PCWorld. 10 Netflix power tools: Optimize your viewing experience. Retrieved from http://www.pcworld.com/article/218797/netflix_power_tools.html Read More