Netflix is a company that offers subscription-based streaming of movies and television series through the digital platform. The firm brought a new model to the entertainment industry by shifting from physical movie delivery to digital streaming. However, Netflix faces competition as the first challenge in its endeavor to navigate the film streaming industry. The introduction of subscription-based streaming has led to the emergence of other companies like Amazon Prime Video offering diverse Subscription Video on Demand (SVOD) packages to movie lovers (Allen et al., 2014). Netflix management has not been more aggressive in the innovation of various streaming packages which cater to the needs of different consumers. The second challenge Netflix faces arises from rights for content. The company’s competitors have identified rights ownership as the ideal tool to use to gain significant viewership and subscription as customers look for various films and television series that might be exclusive to certain streaming channels.
Disruptive technology has various advantages to the Netflix streaming services. First, disruptive technology allows the company to develop different business models meant to increase profitability. Using this strategy, Netflix will offer different pay-per-view packages and price catalogues for various customers and thus expand its market share. The company can also use disruptive technology to gain a competitive advantage over other digital streaming providers by developing unique services like increasing funding to get more exclusive rights and ensuring advanced video quality to its customers. Secondly, Netflix can use disruptive technology by developing pricing models for particular sets of content that cater to the needs of different consumers (Čiutienė & Thattakath, 2014). For many years, the movie delivery sector has relied mostly on high-income earners as the main consumers of their content. Therefore, relying on this social group has limited film consumption to a small portion of the population and thus disregarding people in the middle and low-income groups. Therefore, disruptive technology enables Netflix to develop a competitive pricing model which attracts consumers from all economic groups.
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Various structures and goals make a company achieve a significant benefit from disruptive technology. First, an innovation-driven firm is likely to benefit from disruptive technology due to the new and diverse products this development offers. Disruptive technology enables firms to develop better commodities and services as a way of solving various problems in the industry. However, a firm targeting to take advantage of disruptive technology must bear the increased cost that comes with it to gain long-term benefits. Secondly, disruptive technology significantly benefits a business with a growth mentality as it allows the development of new and innovative products (Majumdar et al., 2018) . This development ensures that a firm reaches a wider market by creating better commodities that appeal to more market bases. For instance, Netflix saw the challenges consumers were facing in accessing films and television series before developing the subscription-based model. On the other hand, disruptive technology will adversely affect a firm that is hesitant in adopting innovative business models. Such a company might try to avoid the increased cost or reduced profits during the stages of a new business model.
There are various strategies a firm can use to survive or take advantage of the disruptive technology. First, a firm needs to identify strengths competitors use to have a market advantage. For instance, Netflix needs to identify strategies that its competitors like YouTube Premium and Amazon Prime Video use to appeal to many customers. From those strengths, the company can develop better strategies like flexible prices that might appeal to significant parts of its competitors’ market bases. The second strategy a firm can use in surviving or taking advantage of disruptive technology is by identifying its advantages and strengths (DeLong, 2016) . It involves analyzing various internal factors like financial strength, marketing strategies, and the product’s unique features which distinguish it from those offered by competitors.
References
Allen, G., Feils, D., & Disbrow, H. (2014). The rise and fall of Netflix: What happened and where will it go from here? Journal of the International Academy for Case Studies, 20(1), 135–143.
Anastasopoulos, L. (2016). The Effects of Urban Diversity on Geographic Polarization: Evidence from Hurricane Katrina Migration. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2818631
Čiutienė, R., & Thattakath, E. W. (2014). Influence of dynamic capabilities in creating disruptive innovation. Economics & Business , 26,15–21.
DeLong, C. (2016). Mollett v. Netflix, Inc. Information & Communications Technology Law , 25 (2), 190-200. https://doi.org/10.1080/13600834.2016.1180827
