Netflix

I wish to make a few comments regarding the recent Netflix news flurry surrounding the recent changes. So the latest is that Netflix is separating the streaming and DVD offerings. From what I've read and understood, the main reason for this is to allow for Netflix to continue offering a great service at a more sustainable price. The contracts that Netflix must negotiate to gain rights to make content available requires a lot of money and pressure has been put on Netflix to act.

There is a lot of user hype around the decision to raise prices and separate the physical and streaming content. I believe this is just a temporary thing because people don't like change that negatively affects them in the short-run.

I believe Netflix has actually made a smart move to put their business in separate profit pools; namely streaming and DVD sales. It has allowed them to target the people that want just streaming, just dvds, or both. They will then be able to push deals for each market separately. In addition, they have introduced video games in to the mix. This provides competition with GameShark, an existing game-rental service currently popular. I believe this growth and division will allow Netflix to better find where the profit pools are and more aggressively negotiate with the entertainment industry to push for better content.

Strategy Journal: Entry 1

I recently read a few articles relating to a new product by MusicLite that introduces high-fidelity speakers into light bulbs. The core concept is that a signal will transmit wireless'ly to a receiver in a light bulb (when turned on) and music will play from the ceiling.

I've thought about this angle on music as it relates to the 5 forces. My thoughts on the 5 forces are listed below:

1. Threat of new entry from competitors: Entry into this arena seems actually quite easy. Once an engineer gets his/her hands on the device, it will be pretty easy to duplicate it.
2. Threat of substitute products/services: Coupled with the first force above, substitutes are definitely going to happen. I do think that the quality of sound may drop with the knock-off products though, as is usually the case.
3. Bargaining power of customers (buyers): No bargaining power that I can foresee
4. Bargaining power of suppliers: I also believe there is little bargaining power for the suppliers of the musical bulb as it's very new and targets a niche market. However, due to the fact that Artison and Osram Sylvania are leaders in their respective markets may provide some bargaining power.
5. Intensity of competitive rivalry: Aside from rip-offs, I don't think there will be high competition. Due to the niche of the music market that has been targeted, there is not a high demand in the arena yet and so a desire for another company to get into it would be far-fetched I believe

Overall, I like the idea that MusicLite has produced but the high price and limited range could make it a less-desirable solution for music enthusiasts.