Netflix has the competitive advantage of being the first in the market to provide remote DVD rental and streaming services as an inclusive package. The contracts involved with a streaming service seem to be the most pivotal component of success; if you don’t have the capital to contract with television shows and movies on your streaming service which are demanded by consumers, you will not be successful.
Upon further research, we found that the majority of legal cases with Netflix as a party were in regards to alleged copyright infringements. Contracts and licensing of movies and TV shows protects intellectual property, ensuring that all parties involved in the production processes, from acting to filming to editing, receive appropriate credits. As contracts and licensing also determine availability to the public and on which platform they reside, this becomes increasingly relevant to Netflix.
As time has passed and the industry evolved, Netflix has maintained their competitive advantage by developing their own production company and releasing made-for-Netflix movies. Competing with other brands for entertainment that was desirable by the consumer is a considerable feat, and Netflix has found success in producing their own shows and movies, keeping those contracts and licensing internal. According to Investopedia, this investment in internal production of media was the largest expense that Netflix faced for some time, however the investment allows the company to use the profits to contract with other networks to allow Netflix to stream their films and television shows.
In addition to contracts and licensing, security of payments and protection of consumer information is imperative. In January of 2011, a class action lawsuit was filed alleging that Netflix had violated the Video Privacy Protection Act in 1988 as well as numerous other California state laws regarding use and retention of consumer information.
Netflix chose to move forward with a Settlement Agreement in April of 2012. With the recent increase in cyber security breaches across numerous sectors, a focus on the security of subscribers’ personal identifying information is crucial; particularly for a company which operates almost exclusively on the World Wide Web. Netflix has shown its subscribers that it is committed to innovative cybersecurity measures by employing extensive security staff who work diligently to develop new security products. This endeavor not only enhances consumer trust but also offers a competitive advantage for the company.
Netflix has experienced its share of controversy over the past few years, from the subject matter of their original works to the contracts with actors and film executives who have been involved in accusations and even litigation stemming from the “#MeToo” movement. It is crucial for a company to respond appropriately to these controversial events, and Netflix has been extremely strategic in their reactions. Although there are numerous external factors to consider when considering controversy, few have the same impact as internal concerns of controversial behavior.
Recently, Netflix hired a Vice President of Inclusion Strategy after the ouster of the company’s previous Chief Spokesperson, Johnathon Friedland over racially insensitive remarks. Netflix CEO Reed Hastings admitted to minimizing the seriousness of Mr. Friedland’s statements. Mr. Hastings has also been in the news defending the use of the “R-word” in a comedy special. I think that given the nature of the service, specifically that Netflix compiles a wide range of creative material suitable for a wide range of interests, any agent of Netflix that spends a lot of time in contact with media and the public presents a unique risk in terms of controversy.
