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Netflix continues to grow and expand and recently announced that it had more than 220 million subscribers in over 190 countries. The organization is now the world’s leading curated video service provider Albornoz & García Leiva, 2022). The US-based company has also diversified from distributing movies and videos from other providers, with original content producing a great part of the company’s operations. The firm is often praised for its diverse range of libraries for its viewers. The exceptional services have resulted in Netflix winning a lot of rewards, including Oscars, Emmys, and Golden Globes. Currently, the CEO of Netflix is still its founder, Reed Hastings, who is known for being innovative and thanked for the company’s growth. The CEO, however, has to deal with various strategic issues that could result in reduced subscriptions.
One of the contemporary issues that are affecting Netflix is strategic risk. The company recently focused on original video content to attract and retain subscribers. Despite spending a huge amount of money on producing this content, the revenues generated did not reach the expected levels, resulting in a reduced expected compounded annual growth rate for the company. For the production of the original content to continue, the firm may be forced to add a subscription fee, a move the company thinks will not be well received.
In addition, Netflix worries about is competition from external parties. Since the barrier to entry is limited in this type of entrainment industry, competitors such as HBO, Disney, and Amazon Prime Video have come up, cutting into Netflix’s market share. There are also supplier strategic issues, with the costs of licensed videos continuing to increase (Iordache, 2022). Some suppliers have also opted to distribute their content without involving intermediaries such as Netflix, resulting in limited content supplied by the firm. Other strategic issues affecting Netflix are regulations in some international markets and language barriers when penetrating these markets, leading to limited subscriptions.
References
Albornoz, L. A., & García Leiva, M. T. (2022). Netflix originals in Spain: Challenging diversity. European Journal of Communication, 37(1), 63-81. Web.
Iordache, C. (2022). Netflix in Europe: Four markets, four platforms? A comparative analysis of audio-visual offerings and investment strategies in four EU States. Television & New Media, 23(7), 721-742. Web.
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