Technology continues to change daily withnew versions of cell phones, televisions, hand held devices and the way wewatch television. From renting DVDs bymail to the convenience of watching television shows, sport events, and movies,the media industry has created a modern world technology that providessubscribers the opportunity to have entertainment from various electronicdevices. Two business owners, Reed Hastings and Marc Randolph, created aninternet based video streaming company, Netflix, which gives the world thecomfort of watching whatever pleases them from home, in cars, at work, at sportevents or basically anywhere there is internet access. This innovativetechnological idea has burst the internet market and has caused theircompetitors to connect in this venture. As the CEO, Hastings, look to transform the industry with videostreaming; his company will encounter challenges in the process.
Netflix: Push and Pushback in Streaming Video Analysis While Netflix is gaining themajority of customers for video streaming, they have embarked upon severalchallenges. Their first challenge is toutilize equipment or devices that customers will have easy access to streamvideos through the internet. Netflixwould have to join forces with other manufacturers who produce products withinternet access. Secondly, the companyhas upcoming competitors with the same business concept as Netflix such asAmazon.
These companies are offeringtheir customers outstanding incentives and promotions for joining theirstreaming services. According to The New York Times, (2016), Amazon lowered its Prime Service and allowed customerswho were subscribers of Sprint mobile to place the monthly fee for services totheir monthly mobile bill. This challenge will be the most difficult challengefor Netflix because most household rather pay one bill for different services.Due to the increase of competitors in the media industry, each competitor willcontinue to adjust and improve upon their incentives for customers to reducethe number of customers who will remain subscribers with Netflix. Thirdly,Netflix is faced with becoming an originator for new programs to stream. Thecompany is faced with striking deals with other media companies for existingshows. Every cable and network wants the world to view their programs.
The mostefficient approach will be partner with Netflix so their programs can be viewglobally. These programs can be viewed multiple times anywhere compared to viewingwhen aired. Most families are deletingtheir cable bills but are more willing to have internet services. Finally,every competitors and every stage of internet streaming wants to have a “payfor services” portion of the Netflix’s revenue. Hastings will have to recognizeas the media industry becomes an icon globally; his financial gain maybeinterfered with unexpected fees due to the increase of supply and demand.
Most large companies are faced withmanagerial challenges which deal with globalization, diversity and ethics.Netflix’s management philosophy to be successful must have the capability tomanage the media industry challenges (list above) as well as the managerialchallenges. Because the internet videostreaming is a no limit industry not bound to limited access to movies, globalmedia industry can be addressed in the first challenge. “Globalization has led to the emergence ofthe global village in the world economy” (Nelson & Quick, p.39, 2013).Netflix needs various manufacturers who hold the license to the products togain access in other venues.
Because some of these products may be produceinternational, the managers of Netflix must adhere to the cultural differencesin those countries. From 1998 to 2016, the first global internet streaming wascreated by Netflix (Osur, L., 2016).Because the United States have an individualistic culture which isdescribed as a country who love themselves, the global marketplace in the mediaindustry must clearly understand the cultural difference in other countries.
Upon the 21st century mission, the company had a series of issues asit encounter different nations with cultural differences, rivals and cost andother challenges (Steel, E., 2014). As challenges two and three are addressed asit relates to diversity globally, there could be some benefits to thesechallenges. Since, Netflix must compete with companies such as Amazon, CBS, andother major networks, the managers must understand the importance of diversityin the workplace. In challenge two,Netflix has to face the diversity as it works to compete with companies such asAmazon and others.
With the millennials controlling the market in technology,Netflix may be faced with an increasing number of age and gender diversityissues. Diversity andcultural differences in other countries can be problematic. The company’s chiefcontent officer stated “We continue to look at China as an opportunity,but it’s a very complicated one.
” (Lee, Y., 2016). In addressing the fourth challenge, ethicsmay arise due to the implication of supply and demand.
Netflix may be facedwith making unethical decisions with potential tradeoffs. With competitorsthinking their services are worth more based upon Netflix’s progression, onedecision that is presume to be a good decision may not be the best decision forthe company. Sometimes leadership decisions and actions are based upon theircharacter. Therefore, it is imperative to clearly know the integrity of theirmanagers because their decisions will be recognized and the damage may causethe company major problems. For several years, Netflix hasutilized methods to integrate streaming video in households across theworld.
Netflix has continued to becomethe leading company to become stabilized in the media market with competitorsthrough keeping prices comfortable for household incomes and working with othernetworks to host their special programs consistently. Netflix has the possibility to reach over 60 millionsubscribers, which will be very difficult because there are approximately 77.6million U.S. households with internet services. Conclusion In every business, there will becompetitors because the economy changes and business opportunities arises.
My recommendation to Reed Hastings ismaintain his vision for the media market to stream globally. Hastings mustaddress the following to remain competitive: (1) maintain the company’s abilityto become stable in the global market, (2) maintain a diverse workforce and (3)maintain ethics and character within Netflix. Challenges and competitors willnever cease but how a company operates will determine its long termsustainability. ChiefExecutive, Reed Hastings, has placed Netflix as a complementary service and apartner to media companies rather than a replacement, but that argument willget harder (Atkinson, 2011).