Positive and negative impacts of Netflix on user time and cost efficiency

Netflix: Strengths, Weaknesses and Recommendations

To this juncture, Netflix has been extraordinarily successful based on its singularity within the industry. Currently, Netflix relies on its more than 26 million subscribers, who have had access to video rentals and unlimited streaming movies beginning at just $8.99 a month. As the first service provider of its kind, Chiu (2007) reports, Netflix was able to establish industry partnerships that give it unique access to content and advertising channels. Chiu reports that "from the very beginning of its entry into the market, Netflix understood the importance of making partner- ships with the movie industry, the electronics industry, and retailers[1]. Netflix's name was spread widely through promotions with complementary products, such as DVD players and movie websites.

Its immediate success and its greatest strength would be based on the nature and convenience of its service, which has given users access to a wide range of titles from the comfort of their own homes. Certainly, Netflix would help to directly contribute to the disappearance of home video stores like Blockbuster. For most of its subscribers, this was seen as a far superior model for accessing video media.

Perhaps the biggest weakness in the Netflix strategy relates to the limited amount of content available through its streaming channels. Additionally, recent changes in the pricing rate and structure, which now separates subscription services for DVDs and streaming films into two distinct plans, have raised rates by nearly 60%. (Liedtke, p. 1) Because licensing restrictions prevent it from streaming select content, many popular or classic titles are not available through streaming on Netflix. With a pricing structure that asks customers to choose between the two services, this weakness in the streaming service becomes all the more glaring.

This points to an important recommendation, which is for Netflix to dedicate its resources and priorities in expanding the library of titles which it offers. To date, Netflix has shown that it is capable of providing excellent and exhaustive streaming content, particularly by way of its television series offering. But its film selection lacks many popular and classic titles, a flaw which may make it vulnerable to the next competitor with better legal access. An area of focus should also be on bring more 3D and Super 3D films to subscribers.

In addition to providing a wider selection of titles, it is incumbent upon Netflix to ensure that users are able to find new titles which are likely to appeal to them. This points to a second recommendation, which concerns the improved sophistication of the service's Artificial Intelligence (AI) functions. One dimension of Netflix that is especially valuable is its 'recommendations' service. Here, based on the choices that a viewer has made, Netflix will offer certain recommendations. Often though, and as a consequence of limited streaming titles, these recommendations can be obtuse and unappealing. It is advised that Netflix invest in the Research & Development to make this AI algorithm more intuitive to user interest.