Netflix: Change Context Analysis
Introduction
Netflix began as a DVD-delivery rental service, with members renting DVDs online and Netflix sending them by mail to the recipient. The model quickly proved successful because of its low-cost structure for customers and its convenience. The large DVD rental chain Blockbuster that served as the traditional brick-and-mortar model for DVD rentals went out of business following Netflixs growth in popularity with its online model of customer interactions. Since then, Netflix has transitioned away from DVD-by-mail service to a streaming service, where all content is available for streaming directly from its website. Additionally, Netflix is now producing more of its own content rather than rely on purchasing distribution rights from other content providers. Netflix has essentially become its own production studio and streaming service. This approach appeals to content creators who have signed big deals with Netflix, including Adam Sandler, David Fincher, and others. The only question is whether it can continue to indulge creators while keeping costs low for consumers. For Netflix, the most important change it has engaged in is content creation, because content is king. This paper will explain why this change is an exemplary one and a necessary one for Netflix given the context of change areas in community, political, social and global fields.
Context
Netflix made the change to produce its own content so as to be able to control its own library without having to rely upon other studios for permissions and rights to stream that content. Netflix still offers the streaming of content that it did not produce, but these offerings are temporary and are likely to end as other production studios implement their own streaming services, such as Hulu, Peacock and so on. Netflix thus realized that it had to make a transition to become a producer of original content in order to provide consumers with streaming options while remaining competitive in the streaming industry. It began by disrupting the way in which content is provided to the public with its DVD-by-mail service; but this disruption was only a temporary one and did not provide Netflix with solid ground for maintaining its position in the market.
Community
Netflix made viewing content radically more convenient for consumers first by introducing its DVD-by-mail service and then transitioning to streaming. Consumers no longer had to go to a brick and mortar location to obtain content, such as a Blockbuster or a movie theater. Now they could stream quality content at home on their personal computer or television. Netflix correctly identified the impact that the digital age would have on consumer habits and saw potential for a business model shift towards streaming content. This affected communities immediately, as consumers showed strong preference for Netflix as opposed to traditional methods of viewing content. As Hickman (2012) points out, Netflix was able to lead the change towards streaming by creating a service that appealed to the convenience factor most associated with e-commerce.
Political
Netflix is a global provider of content, but because there are many different governments around the world it has faced political pressures associated with censorship and permissions (Frue, 2018). Currently, Netflix is able to stream in the US and in other states around the globe. However, in countries like China it is blocked for political reasons that have to do with censorship and permissions.
Social
Netflix has been able to change the way people think about viewing content. Before Netflix switched to streaming, people were still resorting to DVDs. Today, DVDs are not sold to the same extent they used to be and renting DVDs is virtually unheard of. Everything is streaming today because of Netflix, which has changed the...
…going to movie theaters for overpriced popcorn, people can stay home to stream. Netflix is loved for that reason.
Globally, Netflix has changed in a way that makes sense around the world. Culture is important to all people. They want to see films and shows that reflect their own values, and Netflix has responded by giving this opportunity.
Outcomes and Impact of the Change
The change to producing content for streaming has led Netflix to be the number one content creator in the streaming industrybut that has come at a price as Collins (2020) points out. Currently, Netflixs change appears to be working but Collins (2020) argues that it is unsustainable because it costs $1 to produce content to achieve $1 of revenue from customer subscriptions. Collins (2020) says that a company can only take on so much debt before it crumbles. However, what Collins (2020) leaves out is that the content created has value in and of itself and could be licensed elsewhere or sold outright at some point.
Conclusion
The value created in the content is not just measured by consumer subscriptions. Still, there is some risk going forward that Netflix will have to find another way to change in order to stay competitive as other studios enter into the streaming industry. This change has been a positive one for the company and in spite of the costs required to produce content consistently, Netflix is poised as the dominant content service provider in the streaming industry. However, it has new rivals in Amazon, Apple, HBO Max, and Disney+, all of whom are also engaged in producing and streaming original content. To appeal to a global audience, Netflix has had to define itself as a producer of original content where creators are given creative control over their content and are allowed to pursue their vision…
