Question

Introduction In Module One, you worked with your instructor to choose a firm that matches the following criteria: a publicly traded company operating in the U.S. market that is currently in business. Write a one- to two-page paper that includes the following elements for your chosen firm: NETFLIX

IMPORTANT BE SURE TO INCLUDE THE INFORMATION BELOW AND THE RESOURCES CITED!!!!!

a) Outline the purpose of your final project research paper and explain how it will inform your conclusion. This analysis will then inform your recommendations for how the company can be successful in the future. Be sure to provide some specifics about what you will be analyzing so the reader knows what to expect

b) Summarize the history of your chosen firm and provide an overview for what it does and what goods/services it sells.Be sure to include sufficient detail here. Your company’s website is the best place to find this information. This section should be about one page long

Answer 1

Assuming American Telecom OTT Industry which is well known for content delivery and production and advertising of movies which is broadly driven by 4 players namely:

1. NETFLIX
2. HOTSTAR
3. YOUTUBE
4. AMAZON PRIME

The above market structure us Oligopolistic market structure because of following :

1. Few number of firms with large size
2. Mutual interdependence between firms when it comes to setting industry prices
3. High entry barrriers
4. High market concentration

The firms demand is elastic because industry has seen widescale customer addition whenever prices have taken hit or discounts have bene offered and has seen widescale eruption of customers when prices rise exponentially.

Elasticity will have commendable control over price and revenues. For example an Average revenue per user (ARPU) per month in USA for Netflix is 8 dollars with active customer base of 45 million

Now if the ARPu per month falls to 5 dollars then customers addition rises sharply to 50million as seen historically. Thus total revenues falls by 110 million dollars approximately with fall in prices. Thus elastic demand forces firms to maintain prices in similar range and thereby resulting into price stickiness over long term.

The industry is widely druven by advertising revenues as well as producing rights and licensing rights. The exclusive content of Netflix which is unique and refreshing and providing an unparalleled cibematic experience over tabket or smartphones at mere cost of 8 dollar per month makes it sureshot winner.

However competitive market rates by incumbents make abive numbers less appealing because of rising customer addition at low cost of 3 dollars per month by Amazon Prime and completely free model by YouTube.

Thus, Netflix can come up with 4 month model which gives customer 4minth free packages and at cost of 8months of remaining year and thereby attracting customers for 1 full year without any churn.