Netflix Is Putting Its Head In The Sand Over Rising Competition
Dr. Nelson Granados says that competition for Netflix is a real problem. Netflix went from competing in an Over-the-Top (OTT) streaming blue ocean with little competition, to an environment of severe competition, since HBO launched HBO Now in April 2015 and many others followed since then. The latest move is by no other than Amazon, which launched in April an $8.99 monthly subscription for its Amazon Video service. That has to affect their subscriber base in the long run, and it shows in the fact that they have been missing domestic subscriber forecasts since third quarter of 2015. “That to me is a structural shift in Netflix’s competitive position, and it’s time that executives recognize it,” says Dr. Granados,Associate Professor of Information Systems Technology Management at the Graziadio Business School. “Nevertheless, I’m optimistic that Netflix is on the right track, especially if it can follow through on its global expansion strategy and compensate slower U.S. growth with a significant subscriber growth worldwide. But the adjustment in Netflix’s valuation may be for the long run, because its long-term performance will be affected by new, aggressive competition.” Read more here.