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Netflix: Product Diversification vs. Core Strength, Group 1 Ingesti…
Netflix: Product Diversification vs. Core Strength
Decision-Making Framework
Market Analysis
Industry Trends:
Streaming growth, competition from Disney+, Amazon Prime
Competitive Landscape:
Major players like Disney, Amazon, Apple
Customer Needs:
Demand for original content, diverse genres
Internal Analysis
Strengths:
Strong brand, large subscriber base
Weaknesses:
High content production costs
Core Competencies:
Content creation, data analytics
Strategic Fit
Alignment with Vision and Mission:
Leading global entertainment service
Long-term Goals:
Subscriber growth, profitability
Risk Appetite:
Moderate to high, given investments in new content and markets
Strategic Options
Expand Internationally
Benefits
Access to New Markets:
Growing subscriber base in Asia-Pacific
Diversification of Revenue Streams
: Reduced dependency on North America
Risks
Regulatory Challenges:
Different content regulations
Cultural Differences
: Local content preferences
Trade-offs
Initial Investment vs Long-term Gains:
High upfront costs
Focus on New vs. Existing Markets:
Balancing resources
Diversify Product Offerings
Benefits
New Revenue Sources:
Mobile games, merchandise
Market Penetration:
Attracting new customer segments
Risks
Dilution of Brand
: Moving away from core streaming service
Increased Complexity:
Managing diverse product lines
Trade-offs
Innovation vs. Focus:
Balancing new ventures with core business
Resource Allocation:
Investment in new products vs. streaming
Strengthen Current Market Position
Benefits
Deepened Market Penetration:
Enhanced content library
Enhanced Customer Loyalty:
Improved user experience
Risks
Market Saturation:
Limited growth in mature markets
Limited Growth Potential:
Focusing only on existing markets
Trade-offs
Short-term Stability vs. Long-term Growth:
Balancing immediate returns with future potential
Investment in Current vs. New Opportunities:
Allocating resources effectively
Key Performance Indicators (KPIs)
Expand Internationally
Regulatory Compliance Metrics:
Adherence to local regulations
Revenue Growth from International Markets:
Increased international revenue
Market Share in New Regions:
Subscriber growth in Asia-Pacific
Diversify Product Offerings
Sales from New Products:
Revenue from mobile games
Customer Adoption Rates:
Engagement with new offerings
R&D Efficiency:
Innovation in new product development
Strengthen Current Market Position
Customer Retention Rates:
Subscriber loyalty
Market Share Growth:
Dominance in key markets
Brand Loyalty Metrics:
Customer satisfaction and brand strength
Lessons
Balancing Innovation with Competitive Advantage
Maintaining Leadership in Streaming:
Netflix's core strength is its streaming platform, which has a vast library of original and licensed content. This core business has driven its growth and established its brand globally
Exploring New Ventures:
Diversifying into areas like mobile gaming and merchandise allows Netflix to tap into new revenue streams and engage different customer segments
Resource Allocation
Efficient Investment:
Netflix needs to allocate resources efficiently between its core streaming service and new ventures. This involves balancing the budget for content creation, marketing, and technological advancements in streaming with investments in developing and promoting new products like games and merchandise
Risk Management:
Diversification comes with risks, such as the potential dilution of the brand and increased operational complexity
Group 1
Ingesti Harswadiati - 24020001
Giovano Tanaka Handojo Sungkono - 24020004