Disrupting Disruptors, Whats Going On With Netflix?

3

October

2025

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Once a disruptor to Blockbuster and other video rental firms, Netflix started as a cheaper, simpler way to watch your favourite movies and TV shows. Then, utilizing on-demand video streaming, they started competing with cable networks as well. 

According to Christensen, Netflix is a classic case of disruptive innovation. Netflix entered the streaming market at the bottom as an inferior product. They had a limited catalog and lower bitrates, but had success with consumers who were both fed up with cable networks’ prices and their complexity, and did not want to turn to piracy or other illegal ways of watching content on the other. In fact, in the early days of streaming, Netflix made video piracy obsolete. It simply wasn’t worth the risk anymore when Netflix was so affordable. Then, slowly, as they obtained more licences and technological capabilities improved, they started winning in quality as well. The disruptor had become an incumbent itself.

Now, a decade later, the streaming landscape resembles the incumbent it displaced more than what it originally promised consumers. Fragmented supply, price increases, frequent advertisements, crackdowns on account sharing, and region-locked content have reintroduced the friction to the market that streaming originally took away.

Consumers are clearly unhappy with these developments. Netflix posted its first ever subscriber decline in Q2 2022, losing over 2 million subscribers in one month (GlobalData, n.d.).  While this rapid decline in subscribers was an exception, caused by Netflix’s announcement of no longer allowing password sharing, it exemplifies the issues the streaming industry currently has. But where are consumers turning now? Who is disrupting Netflix?

It turns out, video piracy sites haven’t been sleeping while Netflix has grown. They have turned to mimicking the disruptor’s playbook. They centralize the now fragmented catalogs, breaking down regional barriers, they don’t require accounts, and most importantly, they have caught up in quality as well. Modern video piracy sites not only support Full HD video streaming in real time, but their user interfaces have massively improved as well.

As they are now winning in convenience and able to compete in quality, video piracy sites are acting as a low-end aggregator in the streaming space, and they are regaining market share quickly. The US economy alone loses between $29 and 71$ million due to digital video piracy per year (Spajic, 2023). 

And so the cycle continues. But where is the streaming industry going next? Netflix once disrupted the industry by making video simpler. And consumers are now asking for the same simplicity again. If streaming can once again be the most convenient way to watch your favourite movies and shows, piracy’s advantage shrinks again. So the question for Netflix and its peers is simple: How can they reclaim consumer trust and market share, without abandoning profitability?

GlobalData. (n.d.). Netflix loses almost a million subscribers in last quarter. https://www.globaldata.com/data-insights/technology–media-and-telecom/netflix-loses-almost-a-million-subscribers-in-last-quarter/

Spajic, D. J. (2023, April 10). Piracy is Back: Piracy Statistics for 2025 | DataProt. dataprot. https://dataprot.net/blog/piracy-statistics/

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The Long Tail of Streaming: How Netflix Balances Hits and Niche Content

19

September

2025

No ratings yet.

A few years ago, most people were watching the same popular shows on traditional channels. Nowadays, we have streaming platforms like Netflix, which recommends a mix of popular titles and niche content based on your personal preferences. Personally, I enjoy crime stories, and I noticed the recent hype around the true crime documentary “Unknown Number: The High School Catfish“. It turned into a huge success, showing that Netflix can make even a crime documentary into a global hit. 

What makes Netflix an interesting platform is that it doesn’t only focus on these big successes. It also offers smaller series and films that might not reach large audiences. This balance of popular content and niche options shows the idea of the long-tail strategy. The long-tail refers to a distribution model where content is divided between the “head,” which represents widely popular titles, and the “tail,” which represents niche content (Lozić et al., 2022).

Popular titles like “Stranger Things” or “Unknown Number” bring in a lot of views, but when you add up all the smaller shows, they also make up a large part of Netflix’s revenue. Research shows that about half of its revenue comes from very popular content, while the other half comes from niche products. This goes against the traditional 80/20 rule where most revenue comes from a small group of hits (Joonas et al., 2023).

In class, we discussed that digital platforms don’t have the same limits as a regular retail shop. A shop could only stock the most popular titles, but Netflix can offer thousands at once. This “unlimited shelf space” is one of the biggest advantages of online platforms. In fact, experts describe the future of online business as “selling less of more,” meaning that a wide variety of smaller niche products can together generate significant revenue (Rabinovich et al., 2010).

I find this both exciting and a bit concerning. On one side, I like that I can watch a major crime documentary like Unknown Number and also discover smaller shows. On the other side, I wonder if the recommendations really help me explore new genres, or if they just keep me inside my crime bubble.

References:

  1. Lozić, J., Milković, M., & Čiković, K. F. (2022). The impact of the long tail economy on the business result of the digital platform: The case of spotify and match group. https://www.econstor.eu/handle/10419/281910 
  2. Joonas, K., Mahfouz, A. Y., & Hayes, R. A. (2023). Strategy for growth and market Leadership: the Netflix case. AIMS International Journal of Management, 17(2), 87–102. https://doi.org/10.26573/2023.17.2.2 
  3. Rabinovich, E., Sinha, R., & Laseter, T. (2010). Unlimited shelf space in Internet supply chains: Treasure trove or wasteland? Journal of Operations Management, 29(4), 305–317. https://doi.org/10.1016/j.jom.2010.07.002

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Unbundling vs. Re-bundling: The Next Wave of Digital Entertainment

18

September

2025

5/5 (1)

Netflix and Spotify have changed the way we consume entertainment over the last two decades. Instead of buying numerous CDs for different choices of songs, Spotify allows users to stream an extensive variety of songs under one platform. Spotify’s model allows listeners to instantly explore millions of songs, create personalized playlists, and have the choice to pay for premium features. Similarly, instead of subscribing to an entire cable package to watch a handful of channels, Netflix creates a platform for consumers to binge all their favorite shows and movies under one platform. Netflix’s model offers on-demand access to movies and shows without the inconvenient aspects like physical rentals or cable constraints. 

These approaches worked so well because they addressed these key success factors in technology adoption:

  • Pay only for what you want (Relative Advantage)
  • Simple to use platform
  • Compatible with existing devices
  • Trials through free versions
  • Short-term subscriptions

Consumers saw the value and the quick adoption rates from early adopters to the mainstream audience. Both platforms unbundled the “traditional” package of music and video consumption. These new models delivered flexibility, personalization, choice, and convenience.

However, we are now experiencing how re-bundling can become a problem. With Disney+, HBO Max, Apple TV+, Prime Video, Hulu, and more, consumers often need multiple subscriptions to access all the content they want. Evaluating and choosing between these options, and managing multiple subscription payments has brought back the problems that unbundling initially solved. 

I believe that unbundling was important in the digital transformation of the entertainment industry. However, the next challenge is balancing choice with simplicity. Platforms that can combine personalized recommendations and cross-platform access without forcing consumers to subscribe to multiple services will define the next wave of streaming success. The key question for users is whether unbundled services will continue to deliver value, or whether platforms will evolve to offer smarter, more integrated experiences that make it more convenient to access the content they truly want.

Bibliography:

Fairlie, Mark. “Digital Disrupt: Learning from Netflix.” Business.com, 24 July 2024, www.business.com/articles/digital-disrupt-what-we-can-all-learn-from-the-netflix-model/.

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Netflix’s (seemingly too?) Perfect Recommendation System.

7

September

2024

5/5 (1)

Netflix is widely seen as one of the world’s most successful streaming platforms to date. Many might accredit this success to its broad library of fantastic titles and simple, yet effective, UI. However, behind the scenes a lot more is going on, which keeps users on the platform longer, and most importantly, reduces subscriber churn.

While Netflix has 277 million paid subscribers across 190 countries, no user experience is the same for any of these users. Over time, Netflix has developed its incredibly intelligent Netflix Recommendation Algorithm (NRE) to leverage data science, and create the ultimate personalized experience for every user. I think most of us are aware of some personalization algorithms, but not the extent to which they go!

The NRE is composed of multiple algorithms that filter Netflix’s content based on a user’s profile. These algorithms filter through more than 5000 different titles, divided in clusters, all based on an individual subscriber’s preferences. The NRE works by analyzing a wealth of data, including a user’s viewing history, how long they watch specific titles, and even how often they pause or fast-forward. This, in turn, results in videos with the highest likelihood of being watched by the user, being pushed to the front. Which is, according to Netflix, essential, since the company estimates that they only have around 90 seconds to grab a consumer’s attention. I think, as consumer attention drops even further (with apps like TikTok destroying our attention span), this might become even more of a problem in the future. I mean, who has the time to sit down and watch a whole movie these days??

This also ties into the concept of the Long Tail which we discussed, which refers to offering a wide variety of niche products that can appeal to smaller audience segments. Netflix can now surface lesser-known titles to the right audiences using its recommendations algorithms. While these niche titles might have never been discovered by users in the past, Netflix can now monetize the Long Tail of its Library. You must have definitely noticed that your family or friends have titles on their Homepage that you would never see on your own, and this is the NRE at work.

While this model is largely successful, it might raise concerns around content bias. For example, Netflix’s use of different promotional images for the same content based on a user’s perceived race or preferences has sparked debate. Although the intent is to tailor recommendations more effectively, it risks reinforcing stereotypes and narrowing the scope of content that users are exposed to.

Ultimately, user data is exchanged for a super personalized experience, though this experience can sometimes be flawed. What do you think about Netflix’s NRE and its effects on users? Do you think this data exchange is fine, or would you rather just see the same Homepage as everyone else?

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Are we actually going to voluntarily look at ads?

16

October

2022

No ratings yet.

Next month, Netflix will launch a pilot for a new streaming plan. For about $7 per month, users can use the basic version of Netflix but with advertisements. This is about $3 cheaper than the cheapest ad-free version of Netflix. This new version provides access to approximately 90-95% of the streaming platform’s content and shows per hour 4-5 minutes of advertisements. To me it sounds like the Netflix hell, voluntarily adding advertisements to you Netflix account but investors apparently see a future in it. Since the announcement of this pilot, Netflix’s share price is up with 5.4% where it decreased 62% in the six months before the announcement. Not only investors but apparently also competitors of Netflix consider it a promising plan. Disney+, HBO Max and several other companies have created similar plans.

The question is, why do I, as a Netflix user, perceive this as a very bad plan while they still see it as promising? Customers’ needs and preferences differ and that is exactly why this strategy can work. Customers can be divided into various customer segments. This segmentation can be done in several ways: companies can assign customers to a particular segment or customers can assign themselves to a segment. The latter technique is the one that Netflix is exploiting with this plan. Netflix uses ‘versioning’ as a pricing strategy. With this strategy, a company offers different versions of the same product or services for different prices. In this case, the versions consist of either a cheap Netflix account with ads or a more expensive account without ads. Customers self-select themselves to the ad or ad-free version based on their willingness to pay.

So, promising days are coming for Netflix where they hopefully expand their customer base with lower willingness to pay customers. And me? As part of the opposite customer segment, I will happily keep paying $3 a month more to avoid those ads.

https://indianexpress.com/article/technology/tech-news-technology/netflix-ad-supported-plan-to-launch-in-november-at-dollar-7-a-month-8207620/

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Super-bundling – is it coming?

21

September

2020

Are super-bundling services feasible and will they exist in the future? It is unlikely, but the demand is there.

No ratings yet. 237 US Dollars. That is what an average US citizen pays for all their subscriptions. Per month. For entertainment, they have 12 subscriptions on average, of which 3.4 are for video entertainment (amounting to 29 US Dollars per month). 

We are all too familiar with the struggle: we receive word of an awesome new movie or TV series, and when asked where we can see it, it turns out to be shown only on a platform to which we haven’t subscribed yet. The willingness to see it is there, but the willingness to subscribe to yet another platform is not. This could be perceived as customer rent for the producers/distributors, because they miss out on additional income. 

The choice is no longer which movie to watch, but rather to which streaming service to subscribe to, that most appropriately fits with your general preferences. The only issue is that these services are not genre-based, they are all universal streaming services, with content that pleases everyone. The only solution is to subscribe to all. 

The reasonable question then rises: why is there no ‘super-bundling’ service yet? The internet is filled with questions regarding a super-bundling service, that combines all the streaming services into one platform. Although some (illegal) services do exist, not one major party has stepped up yet to realize this. The streaming services are getting more and more consolidated, however, with remaining parties such as Apple TV+, Prime Video, Netflix, Disney+, Hulu, HBO Max, etc. The main issue with more consolidation will be regarding fairness of competition (monopolies), copyright issues, and giving up power (who will buy who?)

Will the future allow for one party to control all these streaming services? Will the streaming industry consolidate and be dominated by one monopoly player that bundles all the services together? Or will they work together in a consortium that has the goal of satisfying customers’ needs? And in case a super-bundling service rises, will it include other media, such as music streaming, newspapers and business articles, or even groceries?

 

Do you think a super-bundling service is feasible? Let your voice be heard in the comments!

 

 

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The Streaming Wars: when streaming services become a more expensive cable

20

September

2019

Netflix is more than just an online digital platform; it has become a cultural phenomenon. Three years ago, Netflix became this one channel to watch virtually anything: from Jurassic Park to Breaking Bad to Toy Story. Many people take their first-month-free subscription because they don’t want to miss out on the latest season of Stranger Things, and never left since. It introduced a trend of binge-watching shows, finishing hours of series in one go until the screen blacks out and asks “Are you still watching?” Television became a device that streams Netflix instead of being its own thing. It lost its meaning so much that many people become cord-cutters – ditching their expensive cable TV subscriptions for a mere $9.99 per month Netflix accounts. It seems that the development of internet goods has yet again made life much cheaper and simpler.

 

Or so we think.

 

Direct-to-consumer distribution model

As Netflix’s popularity and valuation grow, linear (traditional) TV suffer. It is not long when media companies such as WarnerMedia, NBC Universal, and Disney start to launch their own streaming platforms, too. These networks apply a direct-to-consumer distribution model (Sherman & Evans, 2019); instead of selling the licensing rights of their shows to Netflix, they use their brands to make their own platform. These so-called streaming wars prompt TV networks to spend millions of dollars to buy the rights to their most popular shows – such as The Office, Friends, and every Disney movie – back from Netflix to be streamed in their own online platforms NBC’s streamer, HBO Max, and Disney+, respectively (Steinberg, 2019).

Just like most industries, giant tech companies also plans to infiltrate the entertainment industry. Following Netflix’s path of bringing more on-demand consumer base by introducing original content, Amazon Prime Video and Apple TV+ are also in the game with their exclusive contents. For streaming services, the ability to deliver quality content for their platforms is crucial. Take Disney+ as an example: people most probably already have the physical form of their movies, so they need to add value to this new channel (Horner, 2019).

 

Pricing plans

Netflix’s current monthly subscription fee of $9-16 is one of the highest among competitors, Amazon Prime Video ($13), and Hulu ($6-12). However, newcomers’ subscription prices are way lower; with Disney+’s $7 per month and Apple TV+’s mere $5 per month, these prices will definitely damage Netflix’s subscriber count. Other platforms also continue to respond by cutting their subscription prices, like NBCU’s free for cable or satellite subscribers ($12 for non-subscribers). Rao et al. (2000) mentioned that cutting prices may not always be a good retaliation move on their parts as it reduces the overall pie of the market. The other route that each player can take to win is to maximise their platform’s value. Disney, with its extensive collection of movies and series, definitely has the upper hand on this matter. Everything Disney, Pixar, Marvel, Star Wars, National Geographic, 21st Century Fox will be on its platform, which will launch in November this year. Not only that, Disney+ also has a subscription bundling plan with other streaming platforms Hulu and ESPN+; both of which are owned by Disney Corporation as well.

Streaming platforms are, in general, a great innovation because it decouples watching TV and watching advertisements (Texeira & Jamieson, 2014). Nonetheless, it seems that the losing party in this war are the consumers. Taking all the pricing plans mentioned above (plus HBO Max’s rumoured subscription price of $16-20 per month), subscribing to all of these platforms would cost – if not more – the same as cable TV subscriptions. The only difference is that giant tech companies have now also entered the battlefield.

Although we have more choice in what to purchase, more options often mean that we might (reluctantly) spend more money than we should have. “Unbundling” Netflix would only create a fragmented market, which will generally increase prices for content (Steinberg, 2019), and induces the need to – yet again – have a platform that bundles everything together again. So, how many loops will it take before the system breaks?

 

References

Horner, A. (2019, July 3). Streaming wars: Why Disney and Apple rivalling Netflix is good news for fans of great TV. Retrieved September 17, 2019, from Independent: https://www.independent.co.uk/

Rao, A., Bergen, M., & Davis, S. (2000). How to Fight a Price War. Harvard Business Review, pp. 107-116.

Sherman, A., & Evans, D. (2019, August 10). How the streaming wars between Disney, Netflix, Apple and everybody else will change TV forever. Retrieved September 17, 2019, from CNBC: https://www.cnbc.com/

Steinberg, B. (2019, July 18). Why Consumers Are Already Losing in the Streaming Wars. Retrieved September 18, 2019, from Variety: https://variety.com/

Teixeira, T., & Jamieson, P. (2014, October 28). Disruption Starts with Unhappy Customers, Not Technology. Harvard Business Review. 5/5 (1)

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ORANGE MIGHT BE THE NEW BLACK, BUT SPOTIFY IS UNDOUBTEDLY DIFFERENT FROM NETFLIX

18

October

2018

No ratings yet. The recent news about the growth of Netflix subscribers reveals a strong and sound business model. Executives prediction of 5m net new users was far below the actual number of subscribers who joined the platform in the past three months (around 7m). Furthermore, more than 6m of them are international clients, meaning that the business is steadily expanding outside the US.

Because both companies are massive, rapidly expanding and active in the media and entertainment industry, Netflix and Spotify are often compared and considered alike enterprises. In reality, there are some important and structural differences that cannot be disregarded.

Although the two offer an all-you-can-stream service in exchange of a monthly fee, Spotify also provides customers with a free of charge subscription, while Netflix does not, having user subscriptions as the main source of revenues. This implies that as thousands of active users of the music stream app are not paying for the service, accepting the limitations that this entails, the Swedish company also relies on revenues from advertisement.

Furthermore, the two industries they are engaged in, are indeed very dissimilar. First, in terms of production expenses: while almost anybody can produce and broadcast a song, films and series are extremely more costly. This is translated into different incentives for producers: on the one hand, artists and songwriters are likely to rely on as many platforms as possible to increase the diffusion of their pieces to extrapolate most value out of them. On the other, to start the process, filmmakers need sponsors who spread the risk they face by investing in more than one production.

With respect to this, it can be highlighted that Netflix is also involved in the creation of content, while Spotify is not. The former therefore is both a producer and a distributor, while the latter merely offers a product that can be easily found on other platforms.

Spotify is in a weak position when setting prices. In particular, its costs rise as more people subscribe to the platform and stream the song because labels, that still play a major role in the industry, generally pay artists per user who listens to their songs. For this reason, scalability constitutes an issue for the company. Instead, Netflix enjoys a reduction in its per unit costs as more users subscribe to the platform, becoming over time a crucial partner that enables studios to enlarge their reach.

Only the following years will tell us whether Spotify succeeds in the difficult task of transforming its business model into a more sustainable one or whether, after having changed the way people listen and pay for music, it will be replaced by some other company.

Sources:
https://www.barrons.com/articles/spotify-why-it-is-and-isnt-like-netflix-1522939226
https://www.bloomberg.com/news/articles/2018-03-23/why-spotify-can-t-scale-like-netflix
https://www.ft.com/content/f6512c08-d163-11e8-a9f2-7574db66bcd5
https://markets.businessinsider.com/news/stocks/spotify-stock-price-netflix-cant-compare-2018-4-1020586061
https://www.valuechampion.sg/5-reasons-why-spotify-not-netflix-music

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Cutting the TV cord: Streaming live sports

20

September

2017

Live sports: the last bastion of traditional pay-television

No ratings yet. Tens of millions watched the recent Mayweather vs. McGregor fight on pirate streams. According to VFT Solutions, which monitors live streams in social media, over 7000 live streams were being watched in social media platforms by roughly 100 million viewers. (Granados, 2017)

Tens of millions watched the recent Mayweather vs. McGregor fight on pirate streams

How many of you do still pay for cable TV to watch live sports? In the first quarter of this year a record number of people cancelled their pay TV subscriptions and the number continues to slip at the fastest pace ever (Gallagher & Elder, 2017). The number of losses would have been greater, if it wasn’t for sports programming. Over the last few years, people have been talking about the inevitable disruption of the television industry and the threat of new streaming models, like YouTube, Netflix, Hulu and Amazon Video. Telecom companies have seen their revenues switch from pay TV to their broadband Internet services. In the past, a large share of revenue was generated by traditional TV subscription, whereas now steaming video services have become more profitable. This shift in consumer preferences summarises the TV industry disruption.

According to a research by CouponCabin.com 43 percent of cable TV subscribers say that the only reason they still pay for TV subscriptions is for watching live sports (Nooney, sd). Live sports is a major factor keeping people tethered to their cable TV plans and is often referred to as “the last bastion of traditional pay-television.” (Ryan, 2017)

Cutting the TV cord

To give a few examples of live sports migrating to digital platforms, Amazon has been negotiating with some of the U.S.’s biggest sports leagues to acquire the rights to stream sport games. It reportedly paid $50 million to the NFL to stream 10 Thursday night NFL games (DiPietro, 2017). Soccer club AC Milan signed a partnership with live streaming app Sportle, a sports start-up that is changing the way people watch sports. Tech giants are pouring money into acquiring content rights. YouTube secured a deal to broadcast the UEFA Champions League in the UK. This year, Facebook signed multiple deals to broadcast Major League Soccer matches, MLB games and World Surf League events. Meanwhile, Twitter is streaming the WNBA games and exclusive MLB program (Tran, 2017). You might be asking yourself what Netflix is doing. According to the critics, Netflix will not be joining anytime soon. Netflix stays close to its long-term mission saying that they are not a generic “video” company that streams all types of video, such as sports. They want to stay a movie and TV series entertainment network (DiPietro, 2017).

Social media platforms consider live sports as a key catalyst to drive user engagement, growth and eventually revenues. One of the biggest goals for 2017 is to create a social experience around live sports. In February Facebook announced a new app for set-top boxes, including Apple TV, Amazon Fire TV and the Samsung Smart TV. This app enables you to watch Facebook videos on a big screen, which is immensely important for watching live sports. (Forbes, 2017) Summarising, live streaming is one of the biggest social media trends in general, but it reaches it peaks around major sports events.

Resources 

DiPietro, F., 2017. Amazon and Twitter Are Streaming Sports. Will Netflix Follow?. [Online]
Available at: https://www.fool.com/investing/2017/04/22/amazon-and-twitter-are-streaming-sports-will-netfl.aspx

Forbes, 2017. Why Facebook Is Focusing On Live Sports. [Online]
Available at: https://www.forbes.com/sites/greatspeculations/2017/02/23/why-facebook-is-focusing-on-live-sports/#546a27c82dc6

Gallagher, K. & Elder, R., 2017. Pay-TV subscribers continue to slip. [Online]
Available at: http://www.businessinsider.com/pay-tv-subscribers-continue-to-slip-2017-5?international=true&r=US&IR=T

Granados, N., 2017. Tens Of Millions Watched Mayweather Beat McGregor On Pirate Streams. [Online]
Available at: https://www.forbes.com/sites/nelsongranados/2017/08/28/tens-of-millions-watched-mayweather-beat-mcgregor-on-illegal-streams/#7b4bca5179a3

Nooney, C., sd The Future of Sports Streaming In a Cord-Cutting Age. [Online]
Available at: https://www.wired.com/insights/2014/06/future-sports-streaming-cord-cutting-age/

Ryan, K. J., 2017. 5 Industries Ripe for Disruption in 2017. [Online]
Available at: https://www.inc.com/kevin-j-ryan/industries-ripe-for-disruption-in-2017.html

Tran, K., 2017. Facebook is becoming a go-to platform for live streaming sports. [Online]
Available at: http://www.businessinsider.com/facebook-becoming-go-to-platform-live-streaming-sports-2017-6?international=true&r=US&IR=T

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Technology Of The Week – The Succes And Risks Of The Innovative Business Models Of Netflix And Blendle

1

October

2016

5/5 (2) We all know the old fashioned way of watching movies. You had to rent a movie, insert the movie in your video player, skip the annoying parts and enjoy the movie. It was annoying, time consuming and a lot of trouble to just watch a movie.

Nowadays an internet connection, a compatible device and a few clicks are enough to sit back and enjoy your media. Netflix and Blendle made these kind information goods available by ease of replication and distribution. Netflix is a digital movie service where people get a monthly subscription to stream movies and series without commercials. Blendle is a digital news platform that gathers articles from all kinds of newspapers and magazines. You only pay for the articles you read. Articles can be shared, people can react on the articles and comment on these reactions. It is a combination of an online kiosk and a social network.

These business models show us the perfect form of information goods. (1) The information provided by the two organizations are costly to produce but cheap to reproduce. (2) Once the first copy of a good had been produced, most costs are sunk and cannot be recovered. (3) Multiple copies can be produced at constant per-unit costs. (4) There are no natural capacity limits for additional copies. Articles and movies can be sold over and over again. Besides these points the business models version in their pricing. However, in a different way. Netflix offers three subscriptions and therefore gain from extremeness aversion. Humans tend to choose the average option, this Goldilock pricing will increase revenue. Blendle on the other hand prices their articles based on the supplier and the length of the article.

Both business models have a couple of similar strengths:

  1. The services can be easily used on all necessary devices,
  2. They provide much content,
  3. They have low costs compared to the old fashioned way,
  4. They can establish pricing arrangements that capture as much of that value as possible. Done by (a) the registration of the customers, (b) observing queries and clickstreams and (c) through behavioural targeting

Besides these matching strengths, Netflix and Blendle have individual strengths and weaknesses as well:

Table 1

The future shows some interesting opportunities and threats for Netflix and Blendle and for de information goods market as a whole:

Table 2

Overall we can see that Netflix and Blendle are operating in a very interesting market. Offering great opportunities. Both Blendle and Netflix can gain a profit of this fast growing industry.

Group 42 – https://www.youtube.com/watch?v=W_a-XZJ7tnM

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