Innovation in Netflix

This article explores the various innovations that have transformed Netflix into a leading provider of international television streaming and revolutionized the entertainment industry. It discusses the innovations such as the original rental model, the subscriber model, personalized recommendation system, video streaming, exclusive content, and more. It also examines the level of disruption and its impact on affected footholds and stakeholders. Additionally, it analyzes the enabling factors in the country and industry, and the entrepreneurial ecosystem of Netflix.

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Contents
Introduction................................................................................................................................2
Level of disruption.....................................................................................................................3
Affected footholds..................................................................................................................3
Affected stakeholders.............................................................................................................4
Review of enabling factors.........................................................................................................4
Country (PESTLE).................................................................................................................4
Industry (5 Forces).................................................................................................................5
Entrepreneurial ecosystem......................................................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................8

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Introduction
Netflix has developed from a small start-up delivering mail-order DVDs to the domain’s
prominent basis of movie streaming. It has transformed society by the amenities,
personalization and the content. The company has 130 million paid associations in more than
190 countries. The individuals having Netflix membership can watch as much as they dearth,
anytime, anyplace on the internet linked screen. The innovations of the Netflix that changed
the lives of people are:
Netflix, the original: The original is the llargest innovation made by the Netflix till now.
Netflix was first familiarised in 1998 with a wholesome rental model which came with the
related late fees.
Netflix, the subscriber model: The shift to the subscriber model is the second innovation of
the company. The viewers are required to log in, pick a label, pay for it, wait and watch it.
The charges for the movies are less as compared to the rental store.
The Netflix queue: The queue is fundamental to the experience of the Netflix. It enables
customers to colonize and curate a list of the movies, documentaries, TV shows and DVD
centred content for watching.
Personalized recommendation system: The platform of Netflix is constructed around a
tailored movie commendation system. It uses a diversity of procedures to match insides to the
likings of the individuals.
Interchange to video streaming: Over the ages, streaming content derived on the screen and
Netflix switched to it in 2007 with the unveiling of video on request. Now the company has
become a leading provider of international television streaming.
Exclusive content and innovative programming: Netflix has revolutionised the concept of
special content as it has initiated to purchase, improve its own unique programming. The
company has been successful in producing new shops cheaper than the mainstream media
(Christensen, Raynor and McDonald, 2015).
Unlimited access: Netflix has allowed unlimited access to the succeeding level. The full
library is obtainable to maximum of the customers. It offers flexibility to the members by
streaming movies and shows on the tablets, computers, phones, and TVs.

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Binge watching: The binge-watching is a buzzword and is used commonly in the world of
serialized television. It allows members to watch many episodes at a time.
Shifting the entertainment industry: The advantage of the subscription model for both
company and spectators is that it lacks advertisements (Chin, Evans and Choo, 2015). Netflix
does not require raising revenue from the ad sales and the viewers can have the benefit of
commercial-free viewing.
Latest innovation and blocking VPNs: The company has taken the move for blocking VPNs
due to the indigenous and global law and control. Due to it, the content is not available
worldwide. Le VPN is a service used against the blockade and running users around the
world.
Level of disruption
Affected footholds
The low-end foothold signifies the persons or companies at the lowermost of the marketplace.
The visionaries who goal the low-end foothold provide products and services which are more
affordable than the existing in the market. As per this theory, officials provide profitable
customers with the products which are regularly improving. It causes to pay less courtesy to
those who do not want to pay additional money for a superior value. It tends to overpass the
low-end group. It opens the door for the disruptive innovators to provide good enough
products to the clients wanting products at fewer prices (Zhang, 2016).
In the new market foothold, the company can create a market where none existed. It targets a
completely new category of the customers. The company can charge high prices by its
making use of the innovations in the technology. It is equally helpful in targeting large
corporations. It turns nonconsumers into the consumers. The new market generally does not
attract well-established businesses as strategic work is required to attain attention (George
and Lin, 2017). The company can reach out to the new markets and capture the new audience
with the help of innovations. Such type of disruption targets to the customers who do not
have access due to lack of skills and money. This model works with low production and sales
volume.
Affected stakeholders
The aspects of Netflix should be considered in order to understand relevant stakeholders.

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Customers: The customers as stakeholders are categorized by high levels of power and
interest. The revenue of the Netflix entirely depends on the customers’ subscription. Add on,
the slow switching costs offer customers high power. The company is required to engage
completely with the customers and make maximum efforts to satisfy them (Voigt, Buliga and
Michl, 2017).
Suppliers: The suppliers have a high level of power but low levels of interest. The company
has low buying power because of aggressive competition. So the Netflix is at the compassion
of its licensing deal. The suppliers like to favor pay-TV business which produces more value
(Gomez-Uribe and Hunt, 2016).
Investors: The return on investment is the main priority of Netflix. The company is required
to enhance dividends and minimizes losses. It must adopt a business strategy which is less
risky than the prevailing. A strategy should be implemented which maximizes profits from
the existing customers.
Employees: The employees of the Netflix govern the human resource capabilities for the
innovation and development of the products for the company. The interest of the employees
is considered by the company by offering compensation packages. The innovations
implemented by the Netflix eases work of the employees (Haigh and Wigley, 2015).
Review of enabling factors
Country (PESTLE)
Political factors
The political risks are fairly low in the Singaporean market. Singapore is a democratic
country. It enables impartial corporate background for both native and global players. The
composition of Singapore enables people to pick their legislatures legitimately. The country
enjoys great political constancy which is favorable for the innovative global businesses. The
harmony in the country creates a prospect for conducting business. The government is also
speculated restrict free speech specifically from the opposition (Gifford and Nilsson, 2014).
Netflix is required to be careful on its statement to avoid defamation as it could be prompted
by the government. The local government does not severely repress internet but it upholds a
number of websites which are mainly pornographic (Rodan, 2016).

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Technological factors
The trend of adopting technology in growing in Singapore. Singapore experiences
movements like enhanced acceptance of the internet, increasing usage of smartphones,
solicitation of technology in corporate and online shopping. The rend presents prospect to the
Netflix which relies on the technology attractiveness, internet, and shows among consumers
in the target market. The technology substructure of Singapore is praiseworthy. The usage of
internet in households is more than 75%. The B2C and e-commerce models in the country
have developed significantly in the last 5 years. Netflix should invent products in order to
dominate the Singaporean market (Song, 2016).
Social factors
The economy of Singapore is attributed to the eastern culture. Though, the younger
generation in recent years has persuaded towards the western culture and values. English is a
western language which is spoken other than the Chinese in the country. The literacy level
has increased in the country and it is an advantage to the country as packages of the services
are in English. People interested in buying services, find it easy to read instruction and stream
online services. The population is growing mainly of the young adults. The products of
Netflix are becoming popular among adults and it is anticipated to become a strong brand in
Singapore (Osiyevskyy and Dewald, 2015).
Industry (5 Forces)
The threat of new entrants
The new entrants in the Cable Television (CATV) systems fetch innovation and
differentiated way of doing things. It puts pressure on the Netflix through the reduced costs,
price penetrating strategy and by the new value propositions to the customers. Netflix is
always necessitating managing all the challenges and building effective barriers in order to
safeguard the competitive advantage. The company is required innovating products and
services to tackle the threat of new entrants. It can even build capacities and spend money on
research and development (Rayna and Striukova, 2016).
Bargaining power of the buyers
In Singapore, the buyers in the streaming media, Online video on demand, DVD by mail
have high bargaining power holding to the existence of various companies offering the same

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products (Nechaev and Antipina, 2016). The bargaining power of the buyers is high as they
have a lot of options like Amazon Prime, Hulu, Sling TV and more. The customers like to
purchase best offerings at the minimum prices possible. It puts pressure on the profitability of
the company in the long run. The customers can easily switch to another company. Netflix
has just one possibility to win customers through pricing and product quality.
Level of rivalry
The competition in the streaming media is high because of the presence of renowned
companies. Netflix operates in the highly competitive CATV systems industry. The company
is having both direct and indirect competitors. The company directly competes with the
Amazon, Blockbuster, Hulu, and Hooq which offers same service platform along with the
product range and services. The indirect competitors comprise TV and technology
companies. The greater number of competitors along with the products and services affects
the overall business of the Netflix (Hinterhuber and Liozu, 2014). The rivalries drive down
the prices and decrease the overall profitability of the company.
Entrepreneurial ecosystem
Netflix has the potential to address gaps in the economic growth, stability and other actions of
wellbeing in the nations around the globe. A set of domains key to the ecosystem are
described below:
Markets: Netflix is disrupting content production. The company is having its own category
and is expanding in the territory with the star-studded movies. Netflix is the main company to
view the prospective of streaming expertise. Although, the company’s admiration is growing
around the globe. The company has a great number of subscribers in the U.S. it has been
evaluated that 59% of the adults have Netflix subscription in the U.S. For instance, the
company offers free membership to the individuals for the first month in order to capture the
market (Sorescu, 2017).
Human capital: The exceptional HR policy of Netflix has enabled success. The company
ensures that it updates its human capital in order to meet customer promise. The company has
credentialed financial controllers. Netflix hires talent from companies like Google, Amazon,
and Facebook. The company has also instituted competitive market-based salaries for
attracting and retaining talent (Trifilova, 2017). The company has entered into its original
production so it should continue hiring and adapting to accommodate the new operating

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model. Netflix should continue to view human capital on its employee and customer side to
continue delivering values into the original production.
Infrastructure: Netflix’s capability to acclimate to varying technologies and consumer
demands has made it prosperous. The culture of Netflix has helped in developing the
technological infrastructure. It allows the company to scale with the content and in rejecting
bad quality video (Taylor, 2017). The company provides the same video at different bitrates
for dissimilar internet speeds. It even collects data to feed algorithms and in determining
future demand.
Conclusion
As long as the company continues to the tendency of innovation it will endure a significant
opinion in the entertaining industry. The innovations of Netflix changed lives of people such
as Netflix original, the subscriber model, Netflix queue, video streaming, unlimited access
and more. The level of disruption affects footholds along with the stakeholders. The
footholds can be realized in the form of low-end foothold and new market foothold. The
company has stakeholders who take up the company to the higher level. These stakeholders
are customers, suppliers, investors, and employees. The innovations have a role in attracting
investors. The investors significantly increase the revenue of the Netflix. The enabling factors
comprise Pestle analysis and five forces. The enabling factors of Singapore are capable
enough for the scope of the Netflix. On the other side, the company can successfully compete
in the organizational context. The entrepreneurial ecosystem of Netflix has the potential to
address gaps in economic growth, stability and other actions of wellbeing in the nations
around the world.

Innovation 8
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