From fairly early on, Netflix had two distinct services to offer, one of which provided consumers with the ability to watch television programs and movies on-demand on their computers, television sets and other devices. The second service was a unique approach, that mailed DVDs out to consumers, and the consumers then sent them back afterwards. This rental-by-mail approach has been highly popular, especially for consumers who do not have access to the internet, or have poor connections.
However, in recent years, the number of subscriptions to the DVD service has been decreasing, and Netflix has begun to look towards its streaming service as a more effective business model. This approach has led to Netflix expanding its streaming service into upwards of 50 countries throughout the world, most recently into Northern Europe.
What has also changed is that amount of competition that Netflix faces. There are many companies that offer streaming services, and the mailed DVD side of the business is slowly declining, and it is only a matter of time before consumers stop using DVDs altogether. The issue is that the DVD aspect of the business is the area where most profits are made, and the content costs of the streaming component of the business are immense.
A large competitor for Netflix is HBO, which is expanding in to Northern Europe at a similar time to Netflix. The two services offer similar features, and it will be the first time that they have been in competition with each other in such a direct way, as HBO has previously not focused on internet consumers. This has the potential to make Netflix’s new expansion difficult for the company, but they have attempted to account for it by ensuring that they launch with much more content than they would normally have.
Perhaps the biggest unknown factor for the future of the company is the move of Carl Icahn to purchase a ten percent stake in the company. What this means is not known, but the billionaire is well known for purchasing stakes in companies with the express purpose of forcing change. It seems unlikely that Ichan was interested in Netflix in its present state, and it seems like change within the company may be unavoidable.
However, the truth of the matter is that currently, Netflix remains the best service that offers streaming television and movies. While some consumers may be frustrated at the gaps in selection, all streaming companies face similar problems to Netflix and because of this, they tend to be just as limited.