SWOT Analysis

Strengths:

• Brand Recognition:  The Netflix brand is very well known and has become a verb among many internet users. 
• Accessibility:  The Netflix App has enabled their subscribers the ability to stream media on nearly all internet enabled devices. 
• Original Content:  Award winning original content for series House of Cards and Hemlock Grove and other critically acclaimed titles. 

Strengths:

• Brand Recognition:  The Netflix brand is very well known and has become a verb among many internet users. 
• Accessibility:  The Netflix App has enabled their subscribers the ability to stream media on nearly all internet enabled devices. 
• Original Content:  Award winning original content for series House of Cards and Hemlock Grove and other critically acclaimed titles. 
• Cost of Content:  The cost of mass licensing packages and the in-house original content production has the company undertaking a large amount of debt.
• DVD Subscribers: DVD and Blu-ray subscribers have dramatically declined in 2013.
• Raising Subscription Prices:  Netflix has a difficult time raising subscription prices.  The last attempt to raise monthly subscription prices left currently subscribers upset and Netflix stock tumbling. 
• International Expansion:  The ability to create original content will enhance international growth.
• Original In-House Programming:  With many house-hold entertainment devices connected to the internet, there is an opening for internet tv and Netflix’s exclusive in-house content poises the company for that demand.
• Word-of-Mouth Campaigns:  Marketing expenses have steadily decreased due to word-of-mouth campaigns based on original content.
• ISPs:  Netflix accounts for about 30% of daily internet traffic.  With net neutrality laws struck down, Netflix may have to assume more debt or cut content. 
• Competition (Amazon Prime, YouTube):  Both, Amazon Prime and YouTube has announced their own original content productions and aim to be a direct competitor to Netflix.
• Content Price:  The price of licensing and renewing those license agreements remain to be the largest threat to the company’s ability to operate at a profit.

Weakness:

• Cost of Content:  The cost of mass licensing packages and the in-house original content production has the company undertaking a large amount of debt.
• DVD Subscribers: DVD and Blu-ray subscribers have dramatically declined in 2013.
• Raising Subscription Prices:  Netflix has a difficult time raising subscription prices.  The last attempt to raise monthly subscription prices left currently subscribers upset and Netflix stock tumbling. 

OPPORTUNITIES:

• International Expansion:  The ability to create original content will enhance international growth.
• Original In-House Programming:  With many house-hold entertainment devices connected to the internet, there is an opening for internet tv and Netflix’s exclusive in-house content poises the company for that demand.
• Word-of-Mouth Campaigns:  Marketing expenses have steadily decreased due to word-of-mouth campaigns based on original content.

THREATS:

• ISPs:  Netflix accounts for about 30% of daily internet traffic.  With net neutrality laws struck down, Netflix may have to assume more debt or cut content. 
• Competition (Amazon Prime, YouTube):  Both, Amazon Prime and YouTube has announced their own original content productions and aim to be a direct competitor to Netflix.
• Content Price:  The price of licensing and renewing those license agreements remain to be the largest threat to the company’s ability to operate at a profit.

 

Recommendations:

Financing and licensing is the immediate threat to the company’s ability to operate on the short-term.  Management may consider introducing a conditional price increase that would supplement some of these costs by implementing limited advertising between programming.   The in-house original content is a noteworthy investment that has benefited the company by generating a word-of-mouth campaign and proving that the company can be an award winning content producer.

Reviews: 

Yelp or Google reviews would not benefit the company or service.  Netflix has few competitors due to the complexity and extreme cost of content licensing that essential prices out the competition to only a few.