Tools:
1. The competitive forces in this evolving global market for streamed video content are
relatively high. The strongest forces are threat of rivals, supplier power, and buyer power.
With the changing technology it is easy for established companies like Apple and Disney
to start a streaming service and with all the platforms offering the same services the
companies need to compete to get the best shows/movies. While also competing for the
Force
Analysis
Strength
Rival
The global market for streamed video services faces a high threat
level of rivals. This pressure of rivalry forces companies to try and
keep customers by offering affordable prices and valued content.
There are several services competing with Netflix such as Amazon,
Hulu, Disney+, Apple TV, Peacock, and more. These companies
generally offer the same product but, need to compete to have the
most popular shows/movies on their platform for an affordable price.
High
New
Entrant
This industry has a medium threat of new entrants. While there are
new streaming services coming into the market because of changing
technology, they still aren’t able to do as well as Netflix. This is due
to Netflix being able to keep up with the change of technology by
switching their company from DVD’s only to online streaming.
Online streaming may be easy to replicate but to be a successful
streaming service a company needs to have the financial capability
to purchase supplier contracts which are highly expensive.
Medium
Substitute
There is a low threat of substitutes to this industry. A substitute to
online streaming would be cable TV. Even people who still use cable
TV also have a subscription to a streaming service. But with the
constant update of content to platforms like Netflix, it makes it
difficult for customers to want to switch to cable.
Low
Supplier
There is a high level of bargaining power in this industry. There is a
lot of influence on the pricing of supplies because there are only a
few companies that produce the entertainment content to buy. There
are also contracts and licenses needed to distribute the content which
involves negotiation on pricing, giving the suppliers the power.
Netflix had to lower their profits to keep their contracts with
suppliers to establish a customer base, proving the power of
suppliers.
High
Buyer
The streaming service industry allow customers to have a high level
of bargaining power over the service providers. All platforms depend
on customers subscriptions for revenue. With low switching costs
and many different platforms to choose from it is easy for a buyer to
cancel a subscription and move onto the newest streaming service.
Netflix can’t charge too high of prices, or they will lose customers to
the other companies, therefore proving the power of the buyer.
High
best products to stream, the platforms need to offer everything at an affordable price to
keep customers.
Supplier power also has a high level of force on the industry. With only a select few
companies to buy entertainment content from and so many new streaming services, the
suppliers have an upper hand with negotiating prices and contracts. Finally, buyers also
have a high level of power. Since the service providers depend on customers
subscriptions for revenue, the platforms need to offer affordable prices to keep customers
from leaving their platform. There are low switching costs and many different platforms
to choose from which forces companies to offer competitive prices to keep the customer
happy.
Threat of new entrants and substitutes have a low threat level in the industry. The biggest
substitute would be cable TV, but most people will have at least one subscription to a
streaming service since cable doesn’t offer every show/movie that a streaming service
may have. Also, to enter this industry a company needs to be well established with
