Netflix is the leading service provider for online movies and television series in the world. FOR NOW.
How long is it going to survive with big competitors like Amazon Prime and Hulu as well as the local competitors stepping forward in the market?
Back then, Netflix started in a market space of digital streaming with no competitors. This made the initial entry easy, but the journey has been difficult and will continue to be so if they do not give reinvention a serious thought.
Netflix started operations as a movie rental company. They focused on keeping entertainment delivery and people’s happiness as their focal points in business. They solved the difficulty of finding and searching through stacks of good movies at an offline retail store like Blockbuster. While Blockbuster and others continued to rely on VHS tapes, Netflix adapted DVDs. Their competitors could not compete on the speed of execution because Netflix had an inventory management system to find DVDs faster and a custom delivery strategy through the US Postal Service.
Today companies like Google, Amazon, and Walmart have built a sustainable competitive advantage using data analytics too. A new competition is almost impossible. They have today become so huge that new competitors cannot enter the market without a good amount of investment. The key competitors to Netflix like Amazon Prime, Disney, Hulu, and the rest are providing similar services and at a comparable price. The competition gets a lot more serious in Asian countries like India where local players like Airtel, Zee, Hotstar, Voot, and Balaji have their own video streaming services.
Countries like India are still predominantly TV subscribers. Direct-To-Home or DTH is the most sought-after mode of entertainment. Also, with the internet speed and connectivity being an issue, Netflix will face issues expanding in regions other than metro cities in India and other developing countries. The price tags that Netflix charges will also need to adapt to the countries that they try expanding in to remain relevant there.
The competition will keep growing over time. Netflix will need to reinvent themselves from time to time. The analysis of data has helped Netflix come up with suggestions for content consumption at this point. Netflix would need to try to tie-up with multiple service providers to gain the needed attraction. The current strategies of providing a 3-month free subscription have proven to be unsustainable post the Covid-19 lockdown. Netflix will need to think about providing budget-friendly plans and increase their volume of sales to remain relevant.
They have a tough road ahead. They have faced a strain on their servers during the recent lockdown situation. With the world entertainment consumption on the rise, Netflix will need to look at better ways to keep the consumers engaged. Data will need to be leveraged and acted upon immediately to bring more original shows to keep the advantage in the market. The goal must be to capture the maximum market and retain them to make it impossible for the competitors to challenge them. It seems to be a tough road ahead to build the needed competitive advantage. Only time will tell if Netflix will survive.