How Does Netflix Use its Advantages to Change its Supply Chain in the Media Industry?
Abstract
Applying Porters value chain theory, this article explores Netflixs transformation from a DVD rental service to a streaming leader.
Pre-2013, Netflix struggled with rising copyright costs, strategic errors, and content loss, causing user decline and falling stock prices. Post-
2013, it prioritized original content production, reducing reliance on external licenses. By integrating technology and expanding globally, Netflix enhanced user experience and subscriber growth. Its revenue model evolved from membership fees to include licensing income. The study
suggests Netflix may leverage its data analytics for future consulting ventures, demonstrating how value chain innovation drives competitive
resilience in digital markets.
Pre-2013, Netflix struggled with rising copyright costs, strategic errors, and content loss, causing user decline and falling stock prices. Post-
2013, it prioritized original content production, reducing reliance on external licenses. By integrating technology and expanding globally, Netflix enhanced user experience and subscriber growth. Its revenue model evolved from membership fees to include licensing income. The study
suggests Netflix may leverage its data analytics for future consulting ventures, demonstrating how value chain innovation drives competitive
resilience in digital markets.
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[1] Porter, M. E. (1991) Towards a dynamic theory of strategy Strategic Management Journal, 12, pp.95-117.
[2] Netflix Inc. (2020) Annual Report 2019. Available at: http://d18rn0p25nwr6d.cloudfront.net/CIK-0001065280/4b247013-f3f1-4881-
92d2-13088d2bd8d7.pdf (Accessed:22 March 2025).
[3] Ou, S. H. and Su, H. T. (2017) Hybrid Business Model Innovation: The Cross-Boundary Mechanism for Over-the-Top Organizations
Management Review, Vol. 36 (Oct 2017), pp. 93-102.
[4] Greenberg, J. (2016). Netflix may never break into China. Wired. Retrieved from https://www.wired.com/2016/01/netflix-may-neverbreak-into-china/
DOI: http://dx.doi.org/10.70711/neet.v3i5.6975
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