Netflix and VOD: Sustaining Competitive Advantage Through Strategy

This essay examines Netflix's competitive advantage in the video-on-demand (VOD) market. It highlights Netflix's pioneering role in creating new markets through innovative distribution channels and its technological approach, viewing itself more as a technology company than a media distributor. Key factors contributing to its dominance include a focus on customer satisfaction, optimized streaming services across various devices, personalized recommendations through data-driven algorithms, and an ad-free viewing experience. The strategic shift towards producing high-quality original content has further solidified its position, earning global film award nominations. Netflix's large market share, extensive distribution network, and significant investment in content creation provide a substantial competitive edge, supported by data-driven strategies that leverage consumer feedback. The company's consistent brand name and ability to embrace innovation have been crucial in maintaining its dominance in the VOD industry.

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Question Two: Netflix Competitive Advantage
Netflix enjoys a competitive advantage over its peers in video on demand.
Competitive advantage has been defined as the set of attribute that allow a business to
maintain advantage over its competitors (Casadesus-Masanell and Ricart, 2010). The
company has been a pioneer of creating new markets through its innovative ideas and
processes. From its inception the company has been at the forefront in creating new markets
through the way it has remodified its distribution channels (Fernández-Manzano, Neira, and
Clares-Gavilán, 2016). The company was responsible for the decline of Blockbuster.com
despite it having a dominant market share in the late 1990’s. The growth and dominance of
Netflix can be attributed to several factors which has made the company dominant in the
video on demand market (Gomez-Uribe and Hunt, 2016). The paper will seek to explore the
several ways in which the company has been able to remain relevant in an ever changing
market.
The company perceives itself as a technology company more than a media
distribution company this has enabled it to invent and develop new technologies geared
towards consumer satisfaction (Barney, 1991). Combining cutting edge technology with
quality content has been a step ahead of the rest of its competitors in the video on demand
market. With over 100 million subscribers the company acknowledges the need for customer
satisfaction as they interact with its services (Bell, Koren and Volinsky, 2008). The company
therefore considers consumer satisfactions as a key element in ensuring that is products are
easily accessible and navigable. The company has optimized its streaming service for a
variety of devices that the consumers owns. All the platforms are optimized to be accessible
regardless of the bandwidth the consumers are surfing on (Fernández-Manzano, Neira, and
Clares-Gavilán, 2016).
The algorithm of their search engines takes note of the customers’ history and offers
recommendation guided by their past behavior. The company has optimized all its platform to
improve on the users’ experience (Osterwalder and Pigneur, 2010). Users continue to prefer
Netflix over other companies due to its ease in navigability and great interaction. The
company offers ad free services meaning that the consumers are not interrupted by any
advertisement from the company. This portrays the company as strictly geared towards
improving the experience of the viewers.
In 2013, Netflix changed its strategy towards content by developing its own content.
The company began poaching high quality director actors and top-shelf writers from movie
production companies. Its goal was to grow original content which it would not need to pay
license for (Gomez-Uribe and Hunt, 2016). The project has paid off with the production of
high quality original content that has been nominated for several global films awards. This
approach has portrayed Netflix as high quality entertainment company able to offer exclusive
content to keep consumer coming back (Matrix, 2014).
Michael Porter described competitive advantage as a result of two general factors
mainly price advantage as a result economies of scale. He further noted that differentiation
through provision of greatest value and user experience at the similar price of their
competitors (Porter, 1989). The sheer size of Netflix and its market share is a great
competitive advantage against its competitors (Adhikari et al., 2012). The company has been
in existence for over 20 years making it a challenge for new entrants to break its dominance.
The company has accumulated over 100 million customers who are happy with the diversity
of films television services and movies offered by the company (Mithas and Lucas, 2010).

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The ability of the company to offer entertainment without advertisement is another edge that
the company has over its competitors.
Netflix has expanded its reach beyond the United States into foreign markets. The
large distribution of its service and products is greater than most of its competitors (Jenner,
2016). This serves as a huge advantage to the company. The company can be able to products
create and produce quality content for a diverse market due to the increasing large audience
(Aguiar and Waldfogel, 2018). The large subscriber base is essential in enabling the company
to develop new content. The company spent $6 billion on content creation a fete that has not
been matched by any media company (Hallinan and Striphas, 2016). The large budget on
content creation head start will ensure that the company continue acquiring new customers
which validates spending more money on content creations.
Emerging technologies from outside an industry tend to have the potential to result in
disruption. It is evident that from the advent of the company, it has approached the industry
from a technological perspective (Mithas and Lucas, 2010). It has developed data driven
strategies which have been beneficial in its dominance. The company heavily invests in data
processing to understand its client better. It was through data processing that the company
was able to develop a film rating system. Data was essential in determining the types of
television series and movies to create when the company was starting its content creation
project (McCord, 2014). The large number of consumers has ensured that the company has
access to rich data essential for defining its business strategies. This is an advantage that its
competitors do not have as they have a limited customer base (Weinman and Euchner, 2015).
Before any project the company engages in deep analysis of the consumer feedback
before going ahead to create new content. They endeavor to develop what their clients are
looking for. Netflix has been able to maintain consistency in its strategy and brand name.
This had made the brand name synonymous with online entertainment etching it deep in the
mind of consumers (Casadesus-Masanell and Ricart, 2010). This is a great competitive
advantage for the company having a brand name synonymous with online entertainment.
In conclusion, Netflix possess a great competitive advantage over its rivals. The
consistent brand which the company has built over the year is an essential asset for has
offered it’s a competitive edge. The ability of the company to embrace and innovative new
ways of content distribution has seen it lay a significant infrastructure that its competitors will
struggle to match. Its large distribution reach venturing in emerging markets has amassed the
company a large base of subscribers more than all of its competitors. These characteristics
have ensured that the company has remained dominant in the video on demand industry
earning it an edge over the rest of the competitor. The conceptualization of Barney when
defining competitive advantage are correct in regard to the analysis above concerning Netflix.

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