Introduction

Netflix is a film and television streaming service founded in 1997 and has over 151

million paid users in over 190 countries. It is one of the world's leading internet entertainment

platforms and provides a diverse selection of TV shows, documentaries, and feature films.

Online streaming has become very common in today’s day and age and the pandemic only added

to the popularity of these sites. Unfortunately, with the increase in multiple streaming sites such

Netflix could see a decline in users because a lot of content was removed by these media outlets

to put on their sites. Furthermore, with binge-watching becoming very common, new shows and

movies need to be added frequently to keep people entertained since many steer away from

purchasing multiple streaming services and Netflix doesn’t have a variety of options anymore.

For this literature review, I set out to answer the question: What is the history and current

status of Netflix within its market, and what issues or challenges are faced by the firm in the

present and future? In the following report, I will review my findings from 7 secondary sources

to discuss first the history of Netflix, its current market status, and finally the most pressing

issues facing the company today and future challenges.

History

Netflix was founded by two serial entrepreneurs, Marc Randolph and Reed Hastings in

1997. It began as a DVD rental business and now has over 151 million paid users in over 190

countries. In 2007 Netflix introduced video streaming where members could instantly watch

content which disrupted the television industry and drove cable companies to adjust their

business practices.
 During a Dealbook Conference sponsored by The New York Times in 2015 CEO Reed

Hastings said in regards to the company's unique corporate culture: "Ultimately, flexibility is

more important than efficiency over the long term,”. Netflix developed engaging original

programming, analyzing user data to better serve subscribers, and allowing people to enjoy the

programs in the ways they want. Its unique programming combined with the ability to stream

whatever you want instantly increased its popularity and subscriber count.

By 2019, an estimated 21.9 million American households would have discontinued their

cable subscription, and this number is predicted to rise to 34.9 million by 2023. This evidence

demonstrates how in this day and age people enjoy having immediate access to whatever they

want. It also goes with the notion that kids nowadays are growing up with everything at their

fingertips. They don’t understand the stress of having to set aside time to watch a program, and

having to rush to the washroom or get snacks during the commercial break, and hearing your

siblings screaming and telling you that the commercial is over and having to run back trying not

to miss anything. Nowadays all you have to do is pull out your phone and start watching

whatever you wish.

Current Status in the Market

In 2020, 6 million US households got rid of cable totaling more than 31 million households in

the States and the number is only increasing. A recent study by the LightShed Partners shows

that SVOD (subscription video on demand) subscribers will double from roughly 650 million

worldwide at the end of 2020 to 1.25 billion by the end of 2024. The company has taken attempts

to combat competition by investing in original content, but it still faces competition from other

entertainment providers such as Disney+, Amazon Prime, and Hulu.

rate for Netflix has slowed down. These streaming services are removing content that was

previously available on Netflix to their own streaming service and this results in many people

cancelling their subscriptions. As I previously stated many individuals binge-watch which results

in the constant need for new content and the options on Netflix are decreasing as time goes on.

Personally I waste a good amount of time trying to find something to watch on Netflix because

it’s like I’ve watched everything. Additionally, many Netflix Original series have huge gaps

between seasons which results in a lot of people losing interest.

Future Challenges

One of the biggest challenges for Netflix is competition. With the addition of multiple

streaming services such as Disney+, Hulu, and HBO Max, Netflix is starting to lose subscribers.

Netflix stock is down 15% after the company missed its subscriber expectations for Q2, and the

short interest is up 20% over the past month. Along with that Netflix still heavily relies on

licensed content which it is losing since those companies are moving the content to their own

streaming services.

7Park Data suggests that, as of last fall, licensed content accounted for 63% of viewing

hours on the platform. Previously Netflix had all marvel movies but after the release of Disney+

majority of them were removed. Furthermore, people steer away from purchasing multiple

streaming services and tend to choose the ones that best fit their needs. If Netflix continues to

rely on licensed content it will lose many more subscribers in the future because those people

will just purchase the other service instead. Overtime, Netflix is becoming just another Tv

network and is no longer the revolutionary platform it once was.

Netflix revolutionized the Tv industry with video streaming and personalized content but

it’s no longer unique. With an increase of SVODs Netflix is losing consumer interests since

many popular tv shows and movies are no longer available. Netflix is starting to become a

regular Tv network and is no longer the revolutionary platform it once was. In my opinion the

only way this could turn around is if the firm started focusing more on original shows and

movies instead of relying on licensed content which at some point have to be removed. The

issues it’s facing along with the current trends hint towards a not so bright future for the

company. In a couple of years Netflix will probably be taken over by Disney+ which is

increasing in popularity and gaining a large amount of revenue since its biggest franchise Marvel

is releasing tv shows like WandaVision, Falcon and The Winter Soldier and currently Loki with

weekly episodes which keep viewers interested and hyped for the new episode. In conclusion

“All good things must come to an end” by Geoffrey Chaucer.