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Team 5 Research Project on Netflix

The purpose of this blog is to talk about an information system that is used by Netflix that

enhances its mobile functions and creates a great user experience for the consumer. Talking

about this information system will help our team go into detail about the pros and cons of the

information system and how it affects Netflix. In later tabs, we will offer how this information

system can be improved to help Netflix enhance its reach and strategy.

The purpose of this blog is to talk about an information system that is used by Netflix that enhances its mobile functions and creates a great user experience for the consumer. Talking about this information system will help our team go into detail about the pros and cons of the information system and how it affectsNetflix. In later tabs, we will offer how this information system can be improved to help Netflix enhance its reach and strategy.

The purpose of this blog is to talk about an information system that is used by Netflix that enhances its mobile functions and creates a great user experience for the consumer. Talking about this information system will help our team go into detail about the pros and cons of the information system and how it affectsNetflix. In later tabs, we will offer how this information system can be improved to help Netflix enhance its reach and strategy.

Conclusion

 

With the rising number of subscribers canceling their service, Netflix must make

some changes. The entrance of competing streaming services gives consumers

the power to choose. Netflix must set itself apart from the pack. Using cutting-edge

technology like virtual reality can enhance the experience for the customer. Netflix

should consider giving subscribers more control over the content that is added to

the catalog. As well as the content that is removed from the catalog.

Starting the conversation with the audience through social media information

systems is a great way to get free market research. Many subscribers leave

because they are dissatisfied with the company's decisions. Cracking down on

password sharing has become a major issue. Password sharing costs Netflix

money, but so does losing subscribers. Netflix should consider adding another tier

to its plans. An ad-supported plan could bring in many new customers and

returning customers. Netflix is still a hugely profitable company, but changes must

be made if the company wants to stay on top. Netflix has a habit of canceling

new shows just as they are growing a loyal fanbase. Many subscribers have

canceled the service because a new show was canceled prematurely or previously

available content was removed. When paying good money for the service you expect

a lot in return. Netflix should definitely give more options to customers.

Business Strategy

Netflix's Five Forces for the Industry 

Rivalry amongst the Existing Competitors: High

In the online subscription film and TV series streaming sector, there is a lot of competition. There are other top-not-over-the-top subscription content broadcasters, such as Amazon Prime Video, in addition to Netflix. Aside from that, there's Disney Plus, HBO Max, Peacock, and Hulu, all of which offer high-quality, up-to-date material. Furthermore, businesses have improved their consumer acquisition strategies. For example, HBO Max offers multi-streaming, but Netflix's multi-streaming is only available to premium or mid-tier subscribers, and Amazon Prime offers offline downloads. Given that other platforms supply equally competent content, these efforts put Netflix in a tough spot.

The threat of Substitute commodities: Low

Broadcast television is the primary replacement commodity for Netflix's offering. Nonetheless, a study reveals that, while Netflix's watch-time for subscription content on-demand increased by seven minutes between 2017 and 2019, the average broadcasted television watch-time per individual in the United Kingdom dropped by fifty hours (from 242 to 192 hours) between 2010 and 2019 – indicating that consumers are exponentially increasing their consumption of online content compared to televised shows, resulting in relatively lower competition.

Potential for new entrants: High

The primary barrier to entry for new entrants who cannot afford to develop their own video content is the high cost of employing video producers or acquiring material from a third party - greatly reducing competition from unestablished new entrants. However, since joining the sector in 2019, newly well-established firms capable of generating their own content, such as Apple TV, have created competing challenges. According to recent polls, some organizations that have no trouble financing the first cash for acquiring content creation equipment want to enter the OTT sector while generating their content offering substantial competitive threats to Netflix.

Suppliers’ bargaining power: Medium

Despite competition from well-established partners like HBO, consumption of video material created by Netflix's Netflix Original is rapidly increasing, rising from 17 percent of Netflix's streams in the United States in 2017 to 37 percent the following year. Furthermore, Netflix has continually challenged theaters' supremacy, resulting in a significant drop in their popularity internationally; as a result, suppliers' negotiating strength is relatively competitive to Netflix.

Buyer’s bargaining power: High

Given that new suppliers are flooding the market with competent content at lower prices, e.g., while Netflix's monthly subscription fee was $12.99 in 2020, Disney's was as low as $6.99 – almost half of what Netflix charges – buyers are now in a position to choose the streaming platform of their choice based on content quality and subscription pocket-friendliness. As a result, purchasers' bargaining power is quite strong.

NETFLIX COMPETITIVE STRATEGY

   Netflix's competitive global strategy is centered on exploiting expertise and learning in order to

sustain a dynamic scale economy. Netflix will be more profitable if it can recruit more paying

users. Because Netflix pays for its main expense, content, on a fixed-cost basis, the company's

operating margin has been rising. Despite the fierce competition, Netflix earned around $7.7

billion in the fourth quarter of 2021, an increase of nearly 1.1 billion over the fourth quarter of

2020. As a result, the business is highly profitable for companies that have invested in content

creation.

Analysis

 

Social Media Information Systems

    

Netflix uses social media information systems to obtain multiple benefits.

SMIS is used by Netflix to strengthen its social customer relationship management.

Social media has given customers more power than ever to communicate publicly about

their grievances. When Netflix management decides to increase pricing, end password

sharing, or make any other changes to services it can leave customers dissatisfied.

Netflix is one of many streaming services that customers can choose from. With the power

of social media, dissatisfied customers can convince others to leave the streaming service

and hurt the brand. Netflix uses social CRM to engage with customers and build loyalty.

Netflix's social CRM and social media strategy ensures that subscribers feel involved in the

decision-making process and that they will have a place to voice their

concerns and criticisms.

SMIS is also used by Netflix for social media campaigns. These campaigns

guarantee that Netflix is involved in the conversation. It brings attention

to the original content. It also starts conversations about important topics.

The 13 Reasons Why campaign opened the dialog for mental health awareness.

Promoting original content with a social media strategy can have surprising results.

A relatively unknown African Netflix show titled Blood & Water had no

existing fanbase. Due to the pandemic, traditional campaigns could not

be utilized. By using social media platforms and influencers Netflix managed to

elevate its little show to the number one spot in 30 countries. It also used

the social capital of the stars of the show to reach subscribers on multiple levels.

        New Uses of Technology

With new and emerging technologies being discovered every day, Netflix needs to be at the forefront of the competition when it comes to new technologies that can enhance and benefit the customer experience.  In the past what really made Netflix stand out and lead the pack was its use of modern technology to deliver the best product possible. One of Netflix’s greatest qualities was its use of cloud streaming. “Amazon Web Services (AWS) is what Netflix uses for nearly all of its processing and storage requirements, including databases, analytics, recommendation engines, and video transcoding. In total, they have over 100,000 AWS virtual server instances.” (Poudel, 2021) AWS helps Netflix offer fast stream times, as well as allows it to operate securely as well as meet capacity needs.

    For future technologies, Netflix can look into technologies that will shake the foundations that

streaming was built on and changed how the consumer watches their content. With new

technology concepts like AR as well as VR experiences Netflix can look at these ideas and help

put the viewer in the forefront of their favorite shows and movies. With specific titles Netflix can

offer AR or VR events such as comedy shows where the viewers at home can pair their oculus

rifts or other headsets and be put in a live “room” and experience the show in real time. Offering

new technology, as well as interactive exclusive opportunities, can catch the attention of

subscribers, and then they will want to take part in the special live events that happen. 

Recommendations

Problem:

In the first quarter of 2022, Netflix reported losing 200,000 U.S. subscribers. They attribute this

loss to competition, password sharing, and the Ukraine-Russia conflict.

Solutions:

Our first recommendation would be to offer an ad-supported plan. Netflix offers three plans,

basic for $9.99, a standard for $15.49, and a premium for $19.99. An ad-supported plan for

$4.99 could bring a considerable amount of new and returning subscribers. The advertising

money would also help Netflix stay competitive.

 Our second recommendation would be to use disruptive technology. Specifically, virtual or

augmented reality content. Netflix already offers interactive content, for example, the 2018 film

Black Mirror: Bandersnatch. Viewers were offered options throughout the film, and the ending

was different depending on which decision was chosen. A virtual reality experience offers a

a computer-generated environment that makes the user feel immersed in the experience.

Netflix does offer virtual reality on its YouTube channel, but it could draw in more subscribers by

making more VR content available.

Our third recommendation is to make subscriber requests easier. Right now, subscribers can put in a request for content by going to the help page of the Netflix website. They could dedicate a social media page to subscriber requests or include a tab on the website and Netflix app. This would make subscribers feel more in control over the content that is added. Netflix could also use polls on social media to see which movie or television show it should add to the catalog.

  The final recommendation would be to add live streaming. Netflix has been adding more reality shows to its catalog. They could have special live broadcasts. These live broadcasts could incorporate votes and polls from social media accounts so the viewer will feel included in the process.

Introduction

                                                                 History                                                                    

In 2022, Netflix reported the loss of subscribers for the first time in over a decade. In the first quarter, they estimated a 200,000 subscriber loss and are expecting a loss of 2 million subscribers in the second quarter of 2022. In light of these findings, the purpose of our report is to find how Netflix can turn around its losses and remain competitive in a very competitive industry. Through our research we have found that Netflix can do better by utilizing IS technology, enhancing the customer experience through new technology, as well as rethinking its business strategies such as subscription tiers and password sharing. 

 Netflix was founded on August 29th, 1997 in Scotts Valley, California by Reed Hastings and Marc Randolph. In 1999 Netflix began offering an online subscription service that mailed subscribers movies from their selection of titles that were on their site with prepaid return mail back labels. Netflix began with a monthly subscription price that allowed you to rent a limited amount of titles at one time depending on your plan.

As years went by and the popularity of the service grew, in 2007 Netflix began to offer streaming specific titles directly from the internet to your house. Netflix has seen great growth from its start and is one of the biggest streaming services in the world and a big reason for the demise of the brick + Mortar video store. As of 2021, Netflix has 11,300 full-time workers over 28 different office locations which span over 23 different countries. As of the third quarter of 2021 Netflix has approximately 214 million global paid subscribers, with over 17,000 movies and show titles globally at their fingertips. 

As Netflix focuses on making more Netflix branded content, in 2021 the library consisted of about 40% of Netflix original series as well as movies and documentaries. Some of Netflix's most popular original titles include Stranger Things, Tiger King, The Queen's Gambit, and The Witcher. All of these series have well over 50 million streams.