Netflix Inc.’s Political, Legal, Regulatory Forces

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Table of Contents

Introduction
External Forces
Conclusion
References

Introduction

Netflix Inc. is one of the largest companies in the American market. We have been delivering our services to the public since 1997. Our main goal is to provide Internet access to films, serials, TV shows through streaming so that our customers can get a fast, convenient, and uninterrupted access to them. Many people have chosen our services, and by the end of 2016, almost 69 million viewers from different countries were our customers and preferred our streaming media services. In addition, our company has been recognized as one of the most successful corporations in the last five years. The purpose of this paper is to provide an overview of external forces that influence Netflix Inc.

External Forces

Political Forces

The company bears full responsibility for meeting the institutional conditions and legislation requirements of the US. In particular, we take mandatory measures to protect intellectual property and combat piracy so that the services that our customers use to meet all standards and rules (“Relationships between key external forces and an organization,” n.d.). Also, we implement measures to meet regulatory requirements in terms of licensing and other rights to the content so that our customers have the exclusive right to watch official streaming media (Ulin, 2013). In addition, we protect the personal data of our users from leaks including their bank details and other personal data, and do not use them without the consent of clients.

Apart from that, Netflix complies with the rules of state competition regulation and does not violate the antimonopoly legislation (“Relationships between key external forces and an organization,” n.d.). Regarding the current trade policy, we pay all taxes and subsidies in the field of mass communication and exclude the possibility of lobbying (Ulin, 2013). Netflix does not represent anyone’s political interests at the local, national, or international levels.

Legal Forces

At present, one of the greatest legal factors that influence our company is copywriting. Netflix intends to be the first to receive the exclusive right to content so that our clients can gain exclusive access to movies, shows, broadcasts, and other streaming media (Netflix, Inc., 2017). The company has been experiencing problems with receiving the rights for first-run content from companies due to the latest legal restrictions. Nevertheless, we make efforts to resolve this issue as soon as possible since our goal is to be the leading supplier of on-demand Internet streaming media.

Regulatory Forces

We would like to note that changes in copyright regulations have a direct impact on the company. Therefore, we comply with all the rules so that we can distribute videos and shows to our clients with no barriers (Fleisher & Bensoussan, 2015). At present, there is a difference in tax differentials for companies streaming videos and those organizations offering offline services, and Netflix ensures that its clients do not fall into the category subjected to taxation.

It is also crucial to dwell upon net neutrality that has been bothering our client groups. This law provides for a person’s right to equal access to any Internet resources (Zelnick & Zelnick, 2013). Our CEO, Reed Hastings, made a statement on behalf of our company that Netflix would no longer support this concept. Due to the fact that our enterprise is the leader in the video-streaming market, we will be able to strengthen our position further by making this decision (Netflix, Inc., 2017). When the regulations in the network neutrality are dropped, it will allow us to establish a new level of entry into the market. Therefore, Internet service providers will no longer be able to decelerate communications for our website. We would like to highlight that Netflix has paid the Comcast fees to ensure our clients are not affected by the changing regulation.

Governmental Forces

In terms of the governmental forces, they determine Netflix’s performance both on the domestic and international level. The state policy of each country specifies our role in the system of socio-political relations. Also, it affects the degree to which our company can be independent of the authorities. Each state has its own levers of regulating competition, which we should oversee (Takane, 2016). For instance, Netflix should comply with the requirements of anti-monopoly legislation and meet the conditions of concluding transactions, which are unique for each country. Moreover, each state controls the activities of media enterprises differently (and applies certain sanctions) or provides for a share of state capital in the holding. Given these factors, we always carefully examine all the prerequisites in order to meet them to the full.

In some countries in which we operate, we have to meet anti-trust regulation, which takes up to 30% of our share. It is a strict barrier, which we have to face to be able to provide our online video streaming services to customers (Ulin, 2013). Apart from that, some governments pose strict tax regulations on the film industry. The application of this measure ensures that foreign companies make financial investments in the culture of the host country. Therefore, Netflix has to be aware of such requirements to be able to operate in the international markets barrier-free and without breaking the exquisite regulations that each country has.

Conclusion

Thus, external forces shape the performance and activities of Netflix. It is one of our main goals to comply with the political, legal, regulatory, and governmental requirements that the US and foreign markets impose on video streaming companies. By being aware of all the variables, we ensure that our clients can receive the services that tailor their needs and demands.

References

Fleisher, C. S., & Bensoussan, B. E. (2015). Business and competitive analysis: Effective application of new and classic methods (2nd ed.). Upper Saddle River, NJ: FT Press.

Netflix, Inc. (2017). Form 10-K. Web.

Relationships between key external forces and an organization [PowerPoint slides]. (n.d.).

Takane, Y. (2016). Constrained principal component analysis and related techniques. Boca Raton, FL: CRC Press.

Ulin, J. (2013). The business of media distribution: Monetizing film, TV and video content in an online world (2nd ed.). Boca Raton, FL: CRC Press.

Zelnick, B., & Zelnick, E. (2013). The illusion of net neutrality: Political alarmism, regulatory creep and the real threat to Internet freedom. Stanford, CA: Hoover Press.

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