As per Porter’s model, the competitive forces in the field are primarily determined by low threats of new entrants due to the need for investments in creating content and the power of suppliers as the main advantage because of producers’ growing significance compared to cinemas (Fata, 2019). The rising power of viewers due to the popularity of services, the low possibility of substitutes due to the preference of these platforms, and the high levels of competition because of many companies in the industry indicate the market’s rapid evolution.
The presence of numerous companies and the popularity of services are the main forces driving change in the market. Their combined impacts are unfavorable in terms of competitive intensity and future profitability as the businesses might need to further lower prices to attract customers.
The key factors in determining a company’s success in the next 3-5 years include the shifts in demand, the flexibility of operations concerning it, and the presence of competitors.
Netflix’s competitive strategy is cost leadership alongside differentiation of the offer, as can be seen from the attempts to minimize prices for products (Fata, 2019). By doing so, the service tries to achieve a cost-based advantage while increasing the number of items available on the platform.
Netflix’s attractiveness is determined by strengths, including its extensive customer base and reputation, in the context of insignificant weaknesses, which are limited copyrights and pricing options (Fata, 2019). Further development is guided by the possibility of cooperating with other companies and reducing prices, whereas competition might slow down the pace of growth.
The position of Apple in the market at the time was favorable due to the provision of extensive options compared to other companies. Meanwhile, its main weakness is the absence of popular films in the library, which can be compensated for by purchasing licensed content.
Fata, E. (2019). Netflix’s business strategy: What your company can learn. Starting Business. Web.