Netflix and its Business Model
Netflix Inc. is a media service provider and production company based in USA. Established in the year 1997, the main business is its subscription-based streaming service providing online streaming of a vast range of television programs and films including many in-house productions. Currently, Netflix is streaming almost worldwide except in mainland China because of local restrictions, Iran, North Korea and Syria because of US sanctions.
The initial business model of Netflix included sales and rental of DVD through mail however, the founder of the company Hastings abandoned its sales almost after a year the company focused over initial DVD rental business. In the year 2010, Netflix underwent business expansion through introducing streaming media services while retaining the DVD and Blu-ray business. Netflix entered in the content production industry in the year 2012 and launched its first series Lilyhammer.
What Sets Netflix Apart From Competitors?
Obtaining a web domain, licensing movies or television program or creating new content is not a difficult task these days. There are many options available which can create packages which include subscriptions of videos that are on demand by the viewers.
One major factor which distinguishes Netflix from its competitors is its understanding as to how long a piece of content is worth airing, its capability to spread the cost of content over ten million subscribers as well as its ability to trace audience that are suitable for niche programming. These are also the advantages which make Netflix worthy of the huge valuation it holds.
Top Netflix Competitors
The online streaming industry has seen a massive influx of production companies which are providing a tough competition to Netflix. Netflix competitors analysis is as follows:
Amazon Prime Video
Amazon Prime is a leading online video-on-demand service owned and operated by Amazon. The platform provides films and television programs for both purchasing and rent along with venturing into other content deals to maintain its competitive edge. One such deal is the multiple years licensing it has with HBO. The worth of Amazon Prime Video is very clear in the market of e-commerce where the company is also directly competing with Google and Apple and is undoubtedly the topmost competitor of Netflix.
HBO Now is a video-on-demand service which is owned and operated by HBO network. Through this service, subscribers can get access to content like films along with other original content over smartphones, PCs and tablets. The content offered on this platform is the catalog of films and series of HBO along with its other content partners including Universal Pictures, Warner Bros., 20th Century Fox and Time Warner.
Hulu is a subscription service which specializes in video-on-demand services and is a joint venture between different entertainment giants like Walt Disney, Time Warner and 21st Century Fox. In 2017, Hulu launched its streaming service live on television and its services include television production and web syndication amongst others.
Apple allows the renting and purchase of movies and television shows through its iTunes media store. The viewers can watch the streaming media overall Apple mobile devices and the viewers also have the facility to purchase the entire season of a particular show.
Recently Google initiated its movie rental service in Android Market in association with an entire interface makeover. Users can rent movies through Google overall Android devices that operate on version 2.2 and above. Moreover, the rent is also quite affordable.
Over this platform, it has become very easy for shoppers to rent a movie without having to visit multiple stores. The 30,000-plus DVD-rental kiosks of Redbox are very popular and its DVD rental is very affordable which is updated weekly with new movies.
Acquiring Vudu, Walmart has made its entry in the media streaming industry and the service was initially available in the set-top box version. However, after expanding the platform, it is now a standalone media service. The best thing about Vudu is that movies are available on the same day of its release on DVD which means that there is no waiting.
YouTube is a video-sharing website where users can share and upload videos for others to view. YouTube.com is operating as a subsidiary of Google since its acquisition by the tech giant. You Tube another major Netflix competitor in terms of popularity as it is the second most visited website. Since YouTube has started live streaming of events, it has emerged as a major competitor of Netflix.
Indirect Netflix Competitors
Local Cable Operators
Though online streaming has completely transformed media consumption still, cable television subscription is very popular in the US where more than 187.6 million adults pay to local cable operators.
TV Channels are those broadcast frequencies over which the television network is distributed. Channels such as CNN, BBC, Fox News, MSNBC and many more holds a potential viewership average which indicates that television channels are a syndicate competitor to Netflix which may not be very stiff however, they may give a run over their money.
Cinema and Theaters
Cinemas and theaters utilize modern technology for projecting motion pictures. This projection can be through satellite links or the internet. Many cinemas across the world have tapped into endless possibilities by the invention of the internet technology and smartphones. Moreover, cinemas are quite appealing to those who like watching movies in groups.
Though competition in this form is illegal and unconventional, it is still a competition for Netflix. Piracy is punishable by law and this includes torrents and file sharing sites. There are many websites which distribute pirated movies thereby taking the revenue away from Netflix.
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