In Adina Alita’s blog about Netflix she addressed several issues facing Netflix. She addresses the barriers of becoming a worldwide company while also providing customers with new content. While these are legitimate difficulties, upon reading another Forbes article, I concluded that the company has even more issues that are limiting their growth. These issues are that other companies are now providing similar services at a lower price and Netflix may have already reached their entire domestic market.
CBS, HBO, and Amazon are only some of the companies that are competing with Netflix, not to mention illegal online streaming. Many of these companies are providing original content, as well as sport matches. With this new competition Netflix will have decide between cost leadership or differentiation strategy. Differentiation could include creating more original movies or series, however I believe that this could be unnecessarily risky. Furthermore there are 37 million Netflix accounts (roughly 1/3 of American households). This shows that there is not much opportunity for growth within the U.S., as they have already captured a large portion of the market. Netflix is also having less success than expected in European countries. The companies entrance into the European market was a long-term tactic and therefore very costly.
I believe that Netflix’s would be most successful if it focused on differentiating itself from other companies. Netflix has continuously shown to be innovative. The company first started with the original concept of mailing movies and then shifting to online and streaming, therefore Netflix simply must find the next step in being the leading company in its industry.