NETFLIX3

Netflix: Push and Pushback in Streaming VideoA Case StudySaint Leo University

Running head: NETFLIX 1

AbstractNetflixKeywords: Netflix, video streaming, technology deployment, Reed Hastings, Marc Randolf, case study

Netflix: Push and Pushback in Streaming VideoIntroduction The movie industry has always been strong in viewership within the theaters and with the release of VHS/Beta formats, outside the theater as well. As technology has changed, so has popular media. Movies have moved from theater to VHS/Beta to DVDs to Blu Ray, to streaming online. Netflix, founded in 1997 - during the DVD era, has taken advantage of the widely popular ideal of video rentals and made it sophisticated. Starting out with just an idea and a strong algorithm, Netflix offered customers to rent their favorite DVDs anywhere in the country and for one flat fee. Netflixs new and innovative approach to movie rentals started to become more than a market fad and soon local Blockbuster storefronts were closed due to the loss of revenue. Once internet commerce opened up to new and developing ideas, Netflix, again took advantage of the opportunity and started to look at a more efficient way of meeting the demand of the consumer concerning entertainment. Netflix started a new idea of streaming video directly into the homes of their faithful consumers to allow a more exciting media experience by watching directly on their at home television. This new and developing delivery system had a few challenges to address and overcome while this new initiative was implemented. The four primary challenges identified by Netflix analysts were: technology deployment, competition in the streaming video market, involvement in original programming and associated reactions of major media companies, and the cost of accessing content. (Nelson & Quick, 2013)Comment by Author: You used the word new two times in this sentence and once in the previous sentence. You may want to come up with a different word for new groundbreaking, upcoming, innovative. The four challenges listed will be the discussion within this paper to identify not only what the challenges entail, but also how they can relate and impact managerial problems as they relate to globalization, diversity, and ethics. In addition, further discussions will reveal actions or suggestions that might convert the challenges into opportunities.Challenges DefinedChallenge 1: Technology Development The first challenge that Netflix had to face was the delivery system to make their interest a reality. Netflix took up the challenge of streaming the video through video consoles , such as PS3 and Xbox, along with additional streaming through SMART TVs, Blu Ray disk units and internet receivers such as Roku (later down the line). Once this path was clear, it is not too difficult to keep progressing into more technology as new media devices and fads are developed. The impact of this new delivery system now allowed Netflix to reach an even broader group of audiences not just in the United States, but also abroad. This transformation brings with it a whole new set of problems, primarily legal issues that Andrew Sparrow (2007) mentions in his book, Film and Television Distribution and the Internet, the very nature of the internet would present a raft of new legal problems. Which countrys law would apply to this global medium? This indicates that Netflix has broken the barrier of the continental boarders, which leads to more global related issues that need to be reviewed. Primarily, what countrys legal boundaries apply to the ecommerce regulations? In turn, this thought process could be adequately applied to the diversity and ethics within the reaches of the media. Should countries be allowed to opt out of allowing Netflix into their country? In China, the media is strictly monitored which directly impacted Googles service within the country. (Argenti, 2013) These are now issues that Netflix must contend with when dealing with a widely diverse consumer base which does not accept all the cultural inferences that the U. S. might accept. Netflix, currently streaming to over 40 countries (Wikipedia, n.d.), must now decide if they will regulate the access to certain content out of awareness of various regulations in the different countries or if they will force that country to filter the initial access from Netflix. This dilemma has still not been figured out; however, if Netflix were to use Google as an example, forcing the country to filter the access would be ideal as long as none of the copyrights and trademarks of the filtered material is infringed upon. The development of new delivery technologies and the extent of use for these systems is probably the easiest of the four major challenges that Netflix has had to face. If the developers of the company keep an active eye on the market with the intention to stay ahead in the adaptation of their product to newly released media transponders, then Netflix will be able to continue to stay ahead of the current market in streaming video. This aggressive technology watch comes at a price to the employees of Netflix. One of the most effective, and less practiced business moves is the release of employees whose skill sets are obsolete vice providing internal training to keep the workforce current. So as Netflix employees find the next best thing to stream or deliver the latest entertainment to the consumer, they may be also signing their pink slip to make room for the new technology experts to rotate in and carry Netflix until they too, are released.Comment by Author: You may want to use a different phrase instead of stay ahead. You used it twice in this sentence. Challenge 2: Competition in the Streaming Video Market Amazon Prime, Google Chrome, Hulu, YouTube, HBO Go, Sling TV, Crunchy Roll and iTunes are just a few of the competitors that Netflix now has to outperform. The cable companies are also looking into ways of competing with Netflix with Xfinity or U-Verse adding not only movies but a series of TV show episodes to allow their customers to catch up with their favorite shows without an extra cost. Netflixs best edge for competition in this market is to continue to stay one step ahead by remaining flexible and current through the media used for streaming and by over the top service to aid consumers in the set up and operation of their media. Comment by Author: This doesnt sound right for some reason. The managerial concerns for this challenge are limited to Netflixs relations with the external competitors and customers. Social responsibility, performance, and solid consumer support is sometimes the only concerns most people have when it comes to supporting more technologically advanced companies. Netflix has had a tarnished reputation for their internal HR practices (McCord, 2014), and during the last few years they have found ways to better manage their staff rotation. This is an aspect that could provide further friction for Netflix, in comparison to their competition, for being labeled as utilizing unethical employment practices; however, as described in Patty McCords article for the Harvard Business Review, she explains the logic and benefits of rotating the employees in the same manner as consumers exchange their movies.Comment by Author: You state that in her article she explains the logic and benefits of rotating employees, but, I think you need to give an example of how she explains this is the right thing to do. The opportunity offered through having so many competitors in the market is in the development and discovery of new technologies, and programs. In 2009, there was a $1 million dollar awarded to Bellkors Pragmatic Chaos for their breakthrough algorithm improving Netflixs delivery and movie rotation service. The contest was necessary to help the company to stay current and ahead of its competitors by providing the best service in the market.Challenge 3: Original Programming and Associated Reactions of Major Media Companies The third challenge identified in the case study is Netflixs involvement in original programming and the Major Medias reactions to no longer providing original daily programming. Netflix has found huge successes in their joined endeavors with Paramount Pictures, Lions Gate Entertainment, and Metro-Goldwyn-Mayer which led to the successful release of Orange is the New Black and House of Cards. Because of the huge and popular responses to both shows, Netflix not only renewed both shows for second and third seasons, but also added additional shows to their regular broadcast. Netflixs multi-service of offering subscriber video streaming of popular shows and movies, and now adding to the list successful original series has impressed a concern among the various public, satellite, and cable networks. The various facets of Netflix and the wide variety of entertainment offered, has caused concern that regular TV, and more traditional channel services will become obsolete. The establishment of Netflix has brought about a culture of change to the media world. As people want their information to be faster and to have unlimited access to entertainment, Netflix has delivered without commercials or video interruptions. This is one of the large reasons Netflix has remained a competitor within the global economy. Their shrewd business practices may edge on the grounds of inconsiderate, however, they have done nothing unethical in their development of new product offerings. Netflix had the opportunity and awareness to pick up shows that other stations had decidedly passed-up and smartly had two year contracts with each of the studios for those shows to ensure full broadcast ownership. There has been nothing shown by Netflixs interest and acquisition of their current original programming that shows that their intentions are cannibalistic as quoted from Universal Studios Craig Kornblau. (Nelson & Quick, 2013) I find that in this identified challenge the unethical behavior would be practiced by the studios when they are intentionally planning to provide less than quality material contrary to what was agreed with Netflix.Challenge 4: Cost of Accessing ContentNetflix has encountered a new challenge to overcome. This one is the result of the overwhelming success of their original series, House of Cards and Orange is the New Black. The backlash of this success results in the higher cost for studios and their media library content. Business for Netflix will soon come at a greater cost in the US and overseas causing a serious reconsideration of current market demands and how to match it up with the companys goals and objectives. The greater cost may come as a hit to Netflix if more studios combine to create a barrier to Netflixs broadcasting ability. This will require the management team to build a more strategic structure in regards to offered network products. Craig Kornblau was reported to saying, Netflix can pay us more or we can reduce the quality of what we give them. (The Los Angeles Times as reported by Nelson & Quick, 2013) If this quote is true to what the Los Angeles Times reported, then it shows clear intention to stray away from good business practices because the fad of Netflix was more successful than originally considered. Understood that the studio, cable, satellite, and station executives are concerned regarding obsolescence, however, that is not a solid enough reason to sabotage an already agreed upon contract or quote. If Netflix is to continue with their global representation, the threats and badgering will have little impact on Netflix. The largest impact could be the hiring pool shrinking as Netflix attempts to find replacements for their rotated staff.Is there an opportunity with this challenge that Netflix can exploit to their betterment? Perhaps not one that is so strong. Netflix has since partnered up with iTunes and Apple to provide quality entertainment and they have taken the time to team up with Starz Entertainment to continue with the original programming. These measures ensure that there will be plenty of entertainment material for their growing consumer network. Comment by Author: iTunes is an Apple product, I would pick one or the other. ConclusionBusiness PushbackNetflix has become a billion dollar success for a company that was referred to as just a fad. Reed Hastings and his current business practices will continue to receive scrutiny, however, as long as he continues to take care of those employees rotated out due to expired knowledge base, the company will continue to grow and develop. As Netflix continues to push further into the video streaming market, it is suggested that they continue to find studios and stations that respect and regard the company highly for their ability to adapt and promote in a growing culture of instant response. Netflix has had a series of challenges and many of those challenges may never go away as newer and newer competitors and technologies enter into the market. It will be up to CEO Reed Hastings and his analysts to find a way to respond to the challenges as they arise, by doing what he has done up to this point in his success: transform them into opportunities for growth and development. Netflix has defined the forward motion of addressing the need for immediate entertainment material accessible by any current and future device. This paper has reviewed the case study, Netflix: Push and Pushback in Streaming Video (Nelson & Quick, 2013), where four distinct challenges were identified and discussed in relation to managerial challenges in the roles of globalization, diversity, and ethics (where applicable) and how Netflix had successfully found a way to turn these into opportunities for success. It is in the identification and analysis of the greatest challenges as they arise that the company will continue to grow and expand further into more countries and cultures, becoming a resource of not only amusement but of information. As the company moves forward to the next new thing, consumers can only imagine what may be next to keep their interest. Perhaps someday in the near future local movie theaters will be streaming the latest releases to meet the immediate demand.General comments: I would go back through and look at your tenses, you tend to go between present and past tense. Not sure which tense you prefer.

References: Argenti, P. (2013). Corporate Communication (6th ed.). New York, NY: McGraw-HillDixon, W. (2013). Streaming: Movies, Media and Instant Access. Kentucky: University Press of KentuckyMcCord, P. (2014 January). How Netflix Reinvented HR. Harvard Business Review. Retrieved from https://hbr.org/2014/01/how-netflix-reinvented-hrNelson, D. & Quick, J. (2013). Netflix: Push and pushback in streaming video. Mason, OH: Cengage LearningSparrow, A. (2007). Film and Television Distribution and the Internet. Hampshire, England: GowerWikapedia. (n. d.). Netflix. . Retrieved from http://en.wikipedia.org/wiki/Netflix