The Technology of Netflix Research Paper Example | Topics and Well Written Essays - 750 words

The Technology of Netflix - Research Paper Example There are not many companies properly involved in the online renting of movies. Moreover, Netflix plays by keeping its cost low as it tries to attract customers to frequently use its services instead of getting movies from stores or going to cinemas. Analysts believe that Netflix is now facing a tough competition in the face of other companies such as Amazon and Apple, which have also started to provide online movie services at an affordable rate. Furthermore, the cost differentiation strategy used by Netflix has been pretty successful is retaining â€Å"frequent watchers† who use the service frequently. Alongside, the company’s differentiation strategy has allowed it to get accessed by customers who avoid going to stores and want to watch movies from the comfort of their homes. Porter’s Five Forces model was discovered in 1979 by Mr. Michael E. Porter of Harvard Business School. This model is used to give five factors that can be used to determine the stage of rivalry within a business. This would subsequently be used to determine the attractiveness of a market. Market attractiveness can be understood in terms of the overall profit levels achieved by an industry. To start off, Porter’s Five Forces model consists of the following five forces, namely threat of new entrants, bargaining power of suppliers, bargaining power of customers, the threat of substitutes and competitive rivalry in an industry. The application of each of these factors to Netflix will now be done to show how this business model works. The easier it is for new corporations to come into in the same business line as Netflix, the tougher would the competitive environment be. For any competitor to start up an online movie rental company, it would require enormous sums of money. Considering the amount of investments that would need to be made in setting contracts