NETFLIX (NFLX) SWOT ANALYSIS

STRENGTHS

Visionary management
In house content production
Ability to attract high quality talent in producers, actors and screenwriting.
First mover advantage with an installed base of over 125 million subscribers globally.
Streaming in xx countries worldwide and exposure to international markets.
Low infrastructure and fixed costs which allows allocation of funds to production and licensing.
Becoming increasingly recognized through awards nominations reflecting quality of content.
Anywhere, anytime, as much as you want access for customers.
Price elasticity of Demand. Netflix has flexibility to increase prices without affecting subscriber numbers.
Advertisement free service.

WEAKNESSES

Licensing - Netflix has access to a huge library of content, however it does pay licensing fees for any content which is not produced by Netflix.
Disney Licensed content
Netflix is still at the stage where it has to issue debt bonds to help pay for content. Subscription fees are not at a self sustaining margin.
Sports related content is a huge market and Netflix has no presence.
No ancillary businesses to contribute towards revenues.
Netflix must pay a fee to ‘app stores’ for each download of the Netflix app as well as a residual fee.

OPPORTUNITY

In March 2018 Netflix announced a partnership with Marriot hotels for Netflix in room service.
Advertising - Netflix’s Strength is the ad free service, however they have experimented with ‘in house’ ads for it’s own shows. Future advertising would add significant revenues.
Price elasticity - Netflix offers a service which could support higher prices without affecting subscriber numbers. A $1/month increase translates into $1.4B of additional annual revenue. 
Netflix is actively pursuing methods to bypass ‘app store’ residual fees.
Exponential subscriber growth - for each household that has Netflix, their children, and their children after will become Netflix subscribers as they age.

THREATS

Growing competition is the greatest threat to Netflix, not only for subscribers, but also for the acquisition of content.
Disney has announced it’s intentions to initiate a streaming service within the next 2 years and recently acquired portions of the fox network including Hulu.
Apple announced it’s intentions to initiate a streaming service expected in the first half of 2019. Apple currently has access to over 1 billion devices worldwide, a huge installed customer base, and the effects on streaming music services such as Spotify are clear with Apple growing at a double digit rate.
Amazon Prime has a growing subscriber base.
Cost increases. Big name actors, producers and screenwriters command higher prices for quality.