Netflix has an interesting market position. Positioned as a differentiated provider, Netflix competes directly against companies like Blockbuster but indirectly against a variety of entertainment options. In online video specifically, Netflix is now the market leader with a 44% share, overtaking Apple at 32.3%, a dramatic decline from past results (Pepitone, 2012). The remaining companies in the market have single-digit shares.
Content is typically licensed, and those licenses cover specific geographic regions. Therefore, Netflix is limited by its licenses as to where it can expand. The company's primary market is the United States. The company also has licenses to operate in Canada, the United Kingdom, Ireland, Scandinavia and a number of countries in Latin America (Netflix, 2012). Its positioning in each market is essentially the same, where it focuses on the high quality of its offering, the vast number...
Netflix was also, in a way, competing against the same companies that provided its content -- the television producers and movie producers. This has created some conflicts for Netflix as it struggles to ensure that it has sufficient content to win competitive advantage (Ha, 2012). As the video streaming market has evolved, Netflix has been able to consolidate its market position. Apple has been the most significant player, through iTunes, but that service has seen steep declines in the past year, something that has created opportunity for Netflix.
Netflix's improvement in competitive position has come with improved financials as well. The company earned $3.2 billion in revenue last year, compared with $1.2 billion…
