This is the details PESTEL analysis of Netflix which is famous entertainment company and have been providing streaming services around the globe. Netflix is an American based world’s leading entertainment provider in more than 190 countries. It works through the internet streaming by subscribing for various TV channels.
Following Pestle analysis of this company gives an overview of the factors that affect its business and how company is able to move through the online market.
Political Factors
In America the government organizations as Federal communication commission can put strict user regulations that will affect the on-demand streaming services. The increase in the internet prices by the government also threatens the business of Netflix. The company has to comply with the EU rule that 30 % content must be European, Netflix is also bound to pay the tax like other traditional television media sources.
Economic Factors
Having millions of subscribers using the Netflix services, the company has successfully maintained the competitive prices over other expensive media subscriptions. The company takes due care of the customer budget and provides affordable yet high quality services to its customers. The currency fluctuations and exchange rates in various countries also affect the expansion of the Netflix business. The value added tax also have an impact on the subscription price making the Netflix a luxury purchase for some customers.
Social Factors
The live streaming service like Netflix catches the younger class more than the elder groups in the countries like UK. With the changing social trends, people are now likely to watch the videos on their smart phones instead of large screens. This results in higher demand for the online content in the customer’s lives. The US cable companies are seeing much loss due to switching of the customers from the pricy cables to the attractive online video options as Netflix.
Technological Factors
Netflix has successfully excelled in the 4k television market and is investing in its research and development department to support the live streaming more efficiently. Netflix is facing another challenge of the data compression of 4k streaming for which the company is going to adopt a new patented technology. This technological innovation will give a competitive edge to the Netflix. The R&D labs of Netflix are creating new software named Hermes which will work for the high quality translation service in more than 190 countries.
Legal Factors
The customer are the assets of any company and their action can bring a major impact on the company’s business. Netflix faced huge cost in 2016 through the customer lawsuit filed against the company decision of increasing the subscription prices. The media also raised huge criticism regarding the confusions in the customer contracts. The company has to fulfill the copyright law standards to restrict the users from accessing the TV content from other countries. For this purpose it has introduced the blocking workarounds for a small segment to put the blocked users in place.
Environmental Factors
The online data servers of the live steaming companies as Netflix put a heavy impact on the environment. While other tech companies are working towards reducing their carbon footprint, Netflix has also carried out a partnership with the Greenpeace. All the technological companies will be paying an environmental bill by 2025 as required by the global governments. While running about one third of the internet traffic of North America, Netflix is also accessed by various groups to use renewable energy sources for its data centers.