Netflix: Analyzing Issues and Proposing Strategic Solutions

This report provides a comprehensive analysis of Netflix, an online entertainment industry giant, addressing critical issues hindering its success and proposing strategic solutions for business development. The report identifies key challenges such as intense competition, pricing strategies, language barriers, and limitations in technological innovation. To overcome these obstacles, the report proposes several solutions, including shifting to a hybrid platform, merging with other internet service providers, studying competitor strategies, developing original content, refining pricing strategies, and expanding into international markets. The report emphasizes the importance of these solutions in gaining a competitive advantage, increasing subscriber numbers, and achieving global market dominance. The report concludes with a personal reflection on the complexities of the online entertainment business and the significance of market analysis and pricing strategies.

Running head: NETFLIX
Netflix
Name of the Student:
Name of the University:
Author Note:

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EXECUTIVE SUMMARY
The primary objective of this particular report is to propose some effective and efficient
solution for the critical issues of an online based entertainment industry. The industry
concerned in this paper is Netflix. The report studies the fundamental problems that block the
success of the concerned online sector. In this connection, the report tends to structure
strategic proposed solutions that may help the industry to obtain its top rank in the global
market and solve the key issues that are blocking the same. The study in this context states
that the effective implementation of the proposed solution will help the company to gain a
better competitive advantage then its peer competitors. Finally, the report ends with the
description of the personal experience felt on the report presented.

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Table of Contents
Introduction................................................................................................................................3
Proposed Solutions.....................................................................................................................3
Why these proposed solutions....................................................................................................8
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Introduction
Netflix Inc. is considered an online entertainment industry. It is an American based
media service provider, debuted in the year of 1997 dated 29th August (Terzić, Branko et al.
2018). The concerned industry is headquartered in the region of Los Gatos, California. Reed
Hastings and Marc Randolph solely own the company. Researches show that Netflix is
emerging amongst one of the highest service provider concerning the online entertainment
concept. However, it was also determined that Netflix lacks behind in few crucial sectors.
This lack has blocked the path of the industry to gain the top rank in the market of online
business. The key issues, in this case, were determined as the increase in intense competition,
reduced number of subscribers because of the high pricing as compared to the competitors
and the barrier to the language of the entertainment. Not only this, the limitations in the
cultural aspects of different countries, especially India, and also the boundations to the factor
of technological innovation in the plans and processes of Netflix have been determined to be
the critical issues in the path of the success of the same.
Proposed Solutions
As implied by Vogel (2014), the concept of Netflix is gradually succeeding after its
existence. However, with the increase in the peer competition in the business of online
entertainment market Netflix is not able to gain a compelling competitive advantage from its
business plan. In this connection, this particular report critically focuses on providing a few
proposed solutions for the betterment of the concerned industry. The same is explained as
below.
Shift to a hybrid platform
Netflix should focus on planning its further growth in developing its service platform
towards its subscribers (Gassmann et al. 2014). As examined by the study that the battle in

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the competition has decreased the growth of Netflix, thus, spreading its platform in
multisided services will help the industry to gain a high number of subscribers. This is
because the dimension of services provided by Netflix will increase and thereby the chances
of growth will increase. In this context, to shift itself to the platform of hybrid services,
Netflix should allow the third party to merge with them and in this regard develop and offer
their content through the means of Netflix platform. The revenue and the transaction fee
earned through this is then shared at the end. As stated by Evans and Schmalensee (2016),
Netflix will gain a lot more advantages by shifting its platform into multisided, then lose
anything. The same is proved by the given diagram showing the success of Hotstar internet
services due to the hybrid nature of the platform.
Figure 1: Showing comparison of hybrid and non-hybrid platforms (Hotstar and
Netflix)
(Source: Based on Khanna 2017)

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Merge with another internet service
As examined with the help of the study done, it was analysed that Netflix can also
merge itself with different internet service providers who deal with providing various aspects
to the subscribers. The potential amongst the service providers was recorded as Cinesift,
IMDB, Amazon Prime and also Rotten Tomatoes. The merger with these online bases will
provide the users with extra information about critics’ rating and efficient search databases
(Pearlson, Saunders and Galletta 2016). This would allow Netflix to provide a large number
of content to the same population of subscribers. The concerned company can, therefore,
boost its growth structure in the market of online entertainment and, in turn, increase its
number of subscribers.
Studying the strategic plan of peer competitors
Netflix, to sustain in the market for the long run and gain a practical competitive
advantage in the same, does not only needs to plan its strategic implementations, but also
study the equal of its peer competitors (Mazzolini 2016). This will help Netflix to understand
the market condition and demand for online entertainment more broadly and therefore make
necessary changes as per requirement in their business structure. In this case, Netflix will be
able to get in the depth of the internet service and understand the points of their strengths and
weaknesses that can be further turned into an opportunity to increase their subscribers and
business deals.

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Figure 2: Showing success rate of peer competitors of Netflix
(Source: Based on Alvaro et al. 2016)
Developing Original Content
As opined by Chan-Olmsted and Shay (2015), to succeed and gain higher brand
loyalty, Netflix should critically focus on producing and developing original and new content
of entertainment programs. Researches show that this alternative has somehow been applied
by Netflix, but they lack behind in the aspects of the same. The concerned company faces
many critical challenges in the evolution of the online content owned by them. The endless
expenditure to meet the demands of the original content production and thereby fulfill both
the expectations of the subscribers as well as the investors turn out to be considerable
pressure for Netflix. In this case, Netflix should understand that this will help them, in the
long run, to sustain premium subscribers and also will turn cost productive with the passing
time. This is because the development of original content will provide Netflix with two-fold
benefits. On the first place, the same would ensure the prior rights of Netflix to own the rights

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of the all over the content of their platform service. Secondly, it would help Netflix to deduct
their expenditure layout to acquire contents from other third parties and also pay them the
share of the revenue.
Pricing strategies
Netflix should focus on their pricing strategies and techniques because the higher
amount of rate charged by Netflix to the subscribers leads to lack of interest in the people to
opt for the same (Nagle and Muller 2017). The people, in this case, shift to other online
entertainment providers with lower cost and similar content. The cost rise has backfired its
growth specifically in the new markets of the online market in the nations of Asia and Africa
where cheap alternatives to the same are available. The market growth opportunities in the
areas of Asia and Africa are considered to be cost sensitive, and in this connection, the
pricing strategy stands out to be a significant growth prospect to the same. Studies showed
that in this case the online platforms of Hotstar and Amazon Prime are conclusively
established in India as compared to Netflix because of the strategic pricing strategies.
Augmentation in the international market
As opined by Heaton, Linden and Teece (2014), augmenting the business structure in
the global base is a massive opportunity for Netflix. In this connection, the concerned online
industry should focus on diversifying its content satisfying the cultural dimensions of
different people that would foster the people to subscribe to the same. The limitations to
languages should be eliminated in the case to let various citizens of different countries choose
their options for enjoying the entertainment programs. This will, therefore, lead to an increase
in the number of subscribers for Netflix. Diversifying in the international market will provide
Netflix with several options of expanding its content as well as will give simplicity to the
viewers of choosing their options of languages and culture.

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Figure 3: Showing opportunities for Netflix to expand in the market of India
(Source: Based on Aguiar and Waldfogel 2018)
Why these proposed solutions
Based on the examination of the above-proposed solutions, the study tends to state
that these solutions are the most effective and efficient ones because the same will help
Netflix not only to gain a higher number of subscribers but also increase its competitive
advantage in the online market of entertainment. The proper implementation of the above-
proposed solutions would result in the retention of Netflix in the long run and also move
ahead of its peer competitors. The desire of Netflix to reach amongst the top-ranked internet
entertainment provider all across the globe will be effectively achieved with the influence of
the above-proposed solutions.

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Conclusion
Based on the paralysation of the above-prepared report, I felt that to run an online
entertainment business successfully; the business entity should strategically study the
complete market structure on a global basis. To gain prior competitive advantage and rank
top in the globe, the focus cannot be limited to only the local market. Moreover, I realised
that pricing strategies play an essential role in the success of an online entertainment-based
business. This is because the peer subscribers do not wish to pay a high rate for entertainment
purpose and shift to the cheaper alternatives available to them. This gave me a piece of clear
evidence that the standard of the app is not a matter of concern for the people; all that matters
to them is the content quality and the low pricing rate. I also felt that the limitations of
establishing and proceeding with an online business are more complicated than that of a
traditional form of business. This is because online business people do not have an idea who
their customers are. In this connection, Netflix remains limited not to maintain a healthy
business relationship with their peer subscribers and retain them in their industry for a more
extended period. The socialising people choosing internet as their entertainment provider
does not remain stick to one prior platform but keeps switching as per the change in their
tastes and preferences. This turns out to be a big challenge for the online entertainment
industries.

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References
Aguiar, Luis, and Joel Waldfogel. "Netflix: global hegemon or facilitator of frictionless
digital trade?." Journal of Cultural Economics 42, no. 3 (2018): 419-445.
Alvaro, Peter, Kolton Andrus, Chris Sanden, Casey Rosenthal, Ali Basiri, and Lorin
Hochstein. "Automating failure testing research at internet scale." In Proceedings of the
Seventh ACM Symposium on Cloud Computing, pp. 17-28. ACM, 2016.
Amatriain, Xavier, and Justin Basilico. "Recommender systems in industry: A Netflix case
study." In Recommender systems handbook, pp. 385-419. Springer, Boston, MA, 2015.
Amatriain, Xavier. "Big & personal: data and models behind Netflix recommendations." In
Proceedings of the 2nd international workshop on big data, streams and heterogeneous
source Mining: Algorithms, systems, programming models and applications, pp. 1-6. ACM,
2013.
Chan-Olmsted, Sylvia M., and Ronen Shay. "Media branding 3.0: From Media brands to
branded entertainment and information." In Handbook of media branding, pp. 11-32.
Springer, Cham, 2015.
Evans, David S., and Richard Schmalensee. Matchmakers: the new economics of multi-sided
platforms. Harvard Business Review Press, 2016.
Gassmann, Oliver, Karolin Frankenberger, and Michaela Csik. The business model
navigator: 55 models that will revolutionise your business. Pearson UK, 2014.
Heaton, Sohvi, Greg Linden, and David Teece. "Business model innovation and
organisational design: a dynamic capabilities perspective." (2014).

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Holt, Jennifer, Gregory Steirer, and Karen Petruska. "Introduction: The expanding landscape
of connected viewing." (2016): 341-347.
Khanna, Virender. "A STUDY ON FACTORS AFFECTING SUBSCRIPTION RATES OF
NETFLIX IN INDIA: AN EMPIRICAL APPROACH." Delhi Business Review 18, no. 1
(2017): 83-100.
Mazzolini, Pierfrancesco. "Netflix: financial position analysis and evolution in the market for
online streaming services." (2016).
Nagle, Thomas T., and Georg Müller. The strategy and tactics of pricing: A guide to growing
more profitably. Routledge, 2017.
Pearlson, Keri E., Carol S. Saunders, and Dennis F. Galletta. Managing and using
information systems, binder-ready version: a strategic approach. John Wiley & Sons, 2016.
Terzić, Branko, Vladimir Dimitrieski, Slavica Kordić, and Ivan Luković. "A Model-Driven
Approach to Microservice Software Architecture Establishment." In Position Papers of the
2018 Federated Conference on Computer Science and Information Systems, p. 73.
Vogel, Harold L. Entertainment industry economics: A guide for financial analysis.
Cambridge University Press, 2014.