Question

The market for online viewing of all types of entertainment programs has been in a state of rapid flux during most of the past two years, and Netflix is driving hard to win a commanding leadership position in most all countries across the world in streaming movies, TV shows, and original content to subscribers.

Before completing these exercises, be sure to read the Netflix case.

What top priority issues does Netflix management need to address?

Select "yes" for those statements below that are accurate and choose "no" for those that are not.

Netflix should use a different strategy to grow its subscriber base as rapidly as is prudent.

(Click to select) Yes No

Answer 1

Netflix management must address strategy issues regarding subscriber growth and adapt to changing preferences from DVD to streaming, while also considering competition from substitutes. They need to avoid past missteps such as misjudging demand elasticity and customer preferences.

Step-by-step explanation:

The top priority issues that Netflix management needs to address include developing a strategy that meets the rapidly changing demands of the online entertainment market. As the number of Netflix subscribers has considerably increased over time, indicating a shift from physical DVD disks to streaming video, they need to determine if the current strategy is suitable to grow their subscriber base. However, this shift may not fully represent customer preferences universally - in 2012, many still preferred DVDs, as noted with the convenience of Redbox kiosks. Netflix has faced challenges such as underestimating the elasticity of demand and the influence of close substitutes like Vudu, Amazon Prime, Hulu, and Redbox. Moreover, they may have also made mistakes in judging customers' preferences and tastes. Despite this, as the preference for streaming video seems to be on the rise with an increasing population, Netflix might still secure a leading position in the streaming industry.