Netflix’s Competitive Advantage

 First Mover Advantage - being the first to enter the market

 Superior Content & Production - recruiting to focus on improvement & new content
creation. The result is an award-winning content portfolio (112 nominations for the 2018
Emmy Awards).
 User Friendly Interface - content positioning would be irrelevant if the platform weren’t
easy to navigate increasing ease of use and access.
 Machine Algorism - Netflix’s’ compression algorithms are 40x more efficient than that
used by standard HD streams. This is a major competitive advantage because it affords
Netflix streaming a direct technological advantage. Further explains the 30+% of
downstream bandwidth usage because users can get better quality.

High Rivalry Among Existing Firms - An increase in competitors due to a wider geographic
reach. Quick, accessible comparisons & competition is mostly reflected by the price offerings.
No advertising - For example, the red DVD mailers used to carry advertising but has being
stopped.
Influence of the Internet:
 Amazon Prime Video – monthly/yearly rates. Includes two-day shipping, discounted
prices, video/music streaming etc.
 HBO Go
 Show Time (with Ads.)
 Hulu (with Ads.) – includes live streaming package
 Twitch (with Ads.)

High Threat of New Entrants - Reduced barriers to entry, as the internet reduces the difficulty
of obtaining critical resources or entering new markets.
Influence of the Internet:
 YouTube TV - only plan available costs $40/month, with add-ons like Showtime
available for an additional monthly fee.
 PlayStation Vue - For $39.99/month, users get more than 40 channels of live TV with
this plan. sports add-ons for a total of $44.99/month with additional add-on options (HBO
etc.) for an increased price.

High Bargaining Power of Buyers – More choices for customers lead to lower costs and
increased customers bargaining power.
Influence of the Internet:
 Consumers bargaining power used to be low, but with more competitors in the digital
streaming market it’s increased significantly. However, since Netflix’s’ content has
originality and uniqueness, switching costs remain high.
High Threats of substitute products or services - alternatives are created by the internet and
other platforms.
Influence of the Internet:
 Live Streaming
 Opting Outside
 Competing Against Free

High Bargaining Power of Suppliers: Companies have equal access to suppliers. it’s easier to
find new suppliers, who in turn have access to more buyers.
Influence of the Internet:
 Netflix improved its optional HD streaming plan from $7.99 to $9.99.

Value Chain Analysis

The process of analyzing an organization’s activities to determine where the value is added to
products and/or services and what costs are incurred for doing so.
 Inbound Logistics: Supply Chain & Customer Relationship
- Production studios/subscribers
 Operations: Computer-Aided Manufacturing Systems
- Machine learning algorithms, personalization, Netflix research,
 Outbound Logistics: Supply Chain & Customer Relationship
- Streaming and real-time content allows subscribers to stream from
anywhere, anytime.
 Sales and Marketing: Websites, Social Media
- Brand management,
- Rating
- Contents advertising on several platforms (YouTube, TV, Facebook etc.)
 Service: Customer Service
- Customer satisfaction is priority
- Removal of online ads from website
- Simple, user-friendly interface
References Sited;

https://www.fool.com/investing/2018/07/21/what-is-netflix-incs-competitive-advantage.aspx
https://www.stanforddaily.com/2018/10/02/netflix-machine-learning-director-talks-personalization-
software/

https://www.fool.com/investing/general/2009/04/28/7-questions-for-netflix-ceo-reed-hastings.aspx