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Organizational Strategic Choice]
This is possible only if operating costs remain stable or market share increases constantly but in the long term this is unlikely in the market where Netflix operates (Mintel, 2012b).
4 Development of strategic choices Proposed alternative: Differentiation As early adopters and streaming enthusiasts have already subscribed, getting incremental
Generic Strategy Industry force Differentiation
subscribers is going to be a slower and more Entry Barriers
Customer loyalty is the best barrier against potential entrants.
Buyers Power
Buyers have less negotiating power because of the small number of close alternatives.
Suppliers Power
Better able to pass on supplier price increases to customers.
Threat of Substitutes
Threat of substitutes reduced thanks to customers becoming attached to exclusive attributes.
Rivalry
Brand loyalty keeps customers from switching to rivals.
expensive task: this is already happening in the U.S.A (Trefis, 2012) and it is likely to happen in the UK as market matures over 2013. SVoD
services
will
need
to
differentiate
themselves otherwise the risk is to devolve into a
one-of-many platform
with
high
rate of
consumer churn (Mintel, 2012b). A unique brand identity is increasingly difficult to maintain as more platforms launch. The services are likely to be differentiated almost exclusively
by
the
content
offered
(Mintel,
2012d). Given the successful launch of original content in the past few months, Netflix should follow the path of American cable TV HBO increasing production of exclusive content to be made available at premium price (Greenfield, 2013).
Another source of differentiation could be collaboration with the streaming music provider Spotify: this would give subscribers the opportunity to listen to their favourite films soundtracks. In terms of pricing there should be the opportunity for users to choose from two different ranges of price, basic and premium, based on the exclusivity of the offerings.
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