The following strategic assets and aptitudes are required to compete in the video streaming sector:
- Content: To draw and keep customers, a service must have a substantial selection of TV shows, movies, and original programming.
- Technology: It is crucial to be able to offer top-notch video content to a variety of devices, such as smartphones, tablets, game consoles, and smart TVs.
- Distribution: Collaborations with media and communications corporations, such as mobile and home internet service providers, can help improve market penetration and exposure to new customers.
- Marketing: Strong marketing and advertising initiatives are required to cut through the clutter of competition and connect with consumers.
Disney Plus, HBO Max, and Peacock, among other newcomers, have grown the streaming market as a whole rather than merely stealing customers away from Netflix and Amazon Prime Video. In the US, households now have an average of 3.1 subscriptions, up from 2.2 in 2018; market research revealed that households would be prepared to sign up for an additional 3.6 services (Grant, 2020). TV networks and cable TV channels have been the main losers. Due to poor household penetration in many regions of the world, the market for streaming video entertainment has significant development potential.
Netflix holds a commanding position in terms of these assets and capacities. Netflix offers a vast library of TV shows, films, and original material, contributing to its ability to draw in and keep a sizable customer base (Grant, 2020). The business has made significant technological investments, enabling it to deliver top-notch video content to various platforms. In order to increase its market penetration, Netflix has also formed agreements with media and telecom businesses like T-Mobile (Grant, 2020). Finally, Netflix has a significant marketing presence and uses advertising and promotions to attract new users.
Disney is in a great position regarding these assets and skills. With the help of its well-known brands and franchises, the firm has a significant collection of TV series and films, which it has used to develop its Disney Plus streaming service (Grant, 2020). Disney has also formed alliances with media and telecommunication businesses, including Verizon, Canal Plus, and Comcast’s Sky, to increase its market share (Grant, 2020). Additionally, Disney has a significant marketing presence and actively promotes its Disney Plus service through pre-launch discounts and advertising.
With around 35 television programs in development, including some based on its Marvel property and Star Wars trademark, Netflix has a more significant collection of original programming. Disney is also stepping up its production efforts, with 15 films in the works for Disney Plus release over the coming several years (Grant, 2020). In terms of the abilities and resources required to compete in the video streaming sector, Netflix and Disney both hold strong positions. Although Disney has a slight advantage in terms of partnerships and leveraging its well-known brands and franchises, Netflix holds a slight advantage in terms of original programming and marketing.
Key Resources and Capabilities for Competing in the Streamed Video Industry
The strategies of Netflix and Disney in the streamed video entertainment market reflect the two companies’ different resource/capability profiles to a large extent. While Netflix has focused on acquiring a large subscriber base through a broad range of original and licensed content, Disney has utilized its iconic brands and franchises to differentiate its services and attract subscribers (Grant, 2020). Netflix has created enormous collections of TV series and movies by utilizing its technological prowess. The business has made significant investments in creating original content, including the hit programs “Stranger Things” and “The Crown” (Grant, 2020). The business has also obtained licensing rights from other sources for well-known television shows and films. As a result, with 208 million users globally as of January 2021, Netflix has become one of the biggest providers of streaming video entertainment (Grant, 2020).
On the other hand, Disney has used legendary franchises like Star Wars and Marvel and its firm brand name to set itself apart from the competition. The business has created and purchased a wide range of well-known content and used its brand reputation to build a devoted subscriber base. For instance, Disney introduced its Disney+ streaming service in 2019, and by the end of the year, it had more than 10 million customers (Grant, 2020). The organization has partnered with media and communications businesses to increase its market penetration. Due to these agreements, Disney can now provide wireless and home internet members with a free year of Disney+.
Despite these advantages, the tactics of both Netflix and Disney have problems and flaws. Due to its reliance on a sizable subscription base, Netflix is forced to consistently create and acquire high-quality content to keep its subscriber base. The business also makes capital-intensive and sometimes dangerous bets on creative content (Grant, 2020). Disney must continually create and buy popular materials to maintain its competitive advantage because it relies on its enduring brands and franchises. Additionally, the corporation may need many resources to monitor its investments in its streaming services because they can be financially problematic.
Instead of reducing the number of subscribers for established firms, new market entries increased the size of the total market. Traditional TV broadcasters and cable TV channels were the main losers. Due to low household penetration in many nations, particularly in emerging markets, the global market has substantial development potential (Grant, 2020). The average home was prepared to pay for several subscriptions, and the number of subscribers per household was anticipated to increase. The decision by Netflix and Disney to raise pricing in 2020 supported this (Grant, 2020). Both Netflix and Disney have successfully capitalized on their core strengths while guarding against their fundamental flaws. Disney has used its well-known brand and enduring franchises to set itself apart from Netflix, and it has used its extensive library of movies and TV episodes to attract new customers. To stay competitive in the market for streaming video entertainment, both businesses must make ongoing strategic investments.
The Relationship Between Strategies and Resource/Capability Profiles of Netflix and Disney
The global market for streamed video entertainment is highly competitive and dominated by two major players – Netflix and Disney. Both companies have unique strategies that reflect their different resource and capability profiles. The two main focuses of Netflix’s approach are producing original content and securing exclusive rights to well-known TV episodes and films (Grant, 2020). The business made significant investments in content creation, and as a result, it has a sizable library of unique content that draws and keeps members (Grant, 2020). Additionally, Netflix has successfully secured the rights to well-known TV episodes and movies, improving its offers and setting it apart from its rivals.
On the other hand, Disney’s strategy concentrates on utilizing its legendary brands and franchises. Disney’s brand-new Disney Plus streaming service, which debuted in 2019, offers material from the Star Wars, Marvel, Pixar, and Disney properties (Grant, 2020). In order to increase its market penetration, Disney has partnered with media and communication businesses.
Additionally, it has access to other revenue sources through its ad-supported Hulu platform. Netflix and Disney’s distinct resource and capability profiles are reflected in their various business strategies. Netflix emphasizes technology and data analytics, which it employs to comprehend its customers’ tastes and make defensible choices about the acquisition and creation of content (Grant, 2020). Additionally, the corporation has a huge advantage over its rivals thanks to its wide selection of TV shows and movies and original content offers.
Moreover, Disney has a broad portfolio of well-known properties and a solid reputation as a brand. The business uses these advantages to draw users to its Disney Plus platform. As new revenue sources, the ad-supported Hulu platform and Disney’s collaboration with media and communication firms are crucial to the company’s overall success.
It is also essential to consider how well each company’s strategy utilizes its assets and fortifies its shortcomings. Utilizing its skills in technology and data analytics, Netflix effectively utilizes its focus on original content and exclusive rights to well-known TV episodes and movies to retain users (Grant, 2020). However, the company’s considerable financial exposure comes from its heavy investment in content production, which increases the chance that its content offers would fail to meet expectations.
Considering the suggestions, I advise Netflix to continue funding original content development while maintaining exclusive rights to well-known TV episodes and movies. The business must keep utilizing technology and data analytics to understand client preferences better and make wise choices about content generation and acquisition. Disney should keep using its recognizable brands and franchises to entice customers to its Disney Plus platform. To further reduce its financial risk, the business should consider growing its alliances with media and communication firms and looking into additional revenue sources.
Success Prospects and Recommendations for Netflix and Disney
The Most Successful Company in the Global Market for Streamed Video Entertainment
When it comes to resources and abilities, Disney is in a good position. The company has a significant portfolio of TV shows and movies owing to its well-known trademarks and franchises, which it has leveraged to create its Disney Plus streaming service. Disney also has a strong marketing activity and regularly advertises offers for pre-launch discounts for its Disney Plus program.
Still, in terms of diversification of resources and products, Netflix is in a dominant position. Netflix has a significant user base because of the breadth of its selection of TV series, movies, and original content. Moreover, Netflix has a strong marketing presence and employs discounts and advertising to draw in new customers. Netflix offers a larger selection of original content, with dozens of television shows currently in production, some of which are based on its Marvel property and Star Wars brand. Therefore, Netflix will be more successful in the domain of video entertainment.
Recommendations for Netflix and Disney to Enhance Their Strategies and Market Positions
Both Netflix and Disney are companies known for successful streaming services. However, there are still several recommendations they must adhere to not only to maintain their competitive advantages but to keep growing. For instance, when it comes to Netflix, the company must focus not only on its streaming platform but diversifying its product portfolio by marketing merchandise and investing in high-quality original films.
In turn, Disney must focus more on its brands, such as Marvel, and consider capitalizing more on the characters of its universe. Similar to Netflix, merchandising and marketing of the characters can be essential for success. Moreover, in terms of diversification, Disney can consider recreational park expansion to other countries as well. Consequently, both companies will be able to capitalize on their strengths.
Reference
Grant, R. M. (2020). Case 5: Streaming Wars. In Contemporary strategy analysis, enhanced (11th ed., pp. 371–383). Wiley Global Education. Web.
Loading...
