In the News

Threats to Netflix - Porter's Five Forces in action

Ian Pryer

15th November 2019

A hat tip to my departmental colleague, Theone Carter, who shared this story and data with me about the threat to Netflix posed by the loss of streaming content to rival platforms. This in an excellent, contemporary case study that could be used to look at Porter's Five Forces and the case for vertical integration.

It's clear that, according to the research at least, a good proportion of Netflix's younger subscribers in particular would cancel if and when certain content is remove from the platform. Of course it's one thing to say you will in a survey and quite another to get around to it. Netflix will hope to benefit from inertia. The article could also stimulate discussion as to why Netflix and Amazon Video have been so keen to grow backward vertically, developing their own content in terms of acclaimed series such as 'House of Cards' and 'Tom Clancy's Jack Ryan'. Apple TV are also developing their own content with 'See' and 'The Morning Show' being two of the latest examples. Plenty here to debate about the bargaining power and where the balance of power lies between streaming services as buyers and the rights holders of programmes such as 'The Office'. With BritBox launching in the UK and these new services starting up in the US, the extent to which barriers to entry are low in the industry increasing the threat of new entrants could also be examined.

And the article raises an interesting point - will customers be prepared to subscribe to multiple platforms as we see more and more entrants fragment the market? Or will this prevent such services achieving the scale they need to be viable in the long term, leading to consolidation in the future?

Ian Pryer

Head of Economics and Business, Hills Road Sixth Form College, Cambridge since September 2014. Previously at Freman College, Buntingford for four years firstly as an NQT/class teacher and then has Head of Department. Formerly worked in retail financial services for nearly a decade. Husband, father and lover of Watford FC, darts and cooking.

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