When evaluating the industry in which Netflix dwells it is clear that having a competitive

edge is going to be short lived. The technology that feeds the distribution channels of the digital

entertainment industry is constantly changing. The industry itself has become saturated with

competition and the services offered to consumers by online streaming companies has become

monotonous. This information is nothing new, Netflix used to have the most user friendly

interface and the lowest price for subscribers, once that was no longer the case they broke into

creating award winning content; and their competition has followed suit. It may seem like there

is no longer an edge to be gained but there are numerous opportunities to ensure the

company’s future success.

Netflix realizes that one of the best ways to defend the company’s market position is to

control the way content is distributed. Recently they have been in communications with

Comcast (a cable and internet provider) to help leverage themselves into a position that will

create a long lasting and profitable relationship with a lead internet provider. The deal allows

for Netflix users to have more bandwidth than other individuals that are streaming without

Netflix. This will allow the company to still offer the most content with better streaming quality

and a relatively low cost to the user.

The competition is already scrambling to try to combat Netflix’s strategic actions and is

looking for anything to maintain a competitive edge. Amazon and HBO, two of Netflix’s main

competitors, are in talks with one another to allow HBO’s award winning content to become

part of Amazon’s premium membership package. Redbox has paired with Verizon to improve its

position and secure its online streaming business with Redbox Instant which is displayed on the
website with the sub text By Verizon. Still the Netflix and Comcast agreement is the most

prudent and time will tell if it is the most successful.

Though the above will cement in Netflix as having the most reliable streaming service a

step has to be taken to keep them at the forefront of the industry and to do that a look has to

be taken at how they began. Netflix used existing technology and services to essentially create a

new industry which put other entertainment companies (like Blockbuster) out of business. The

reason they were successful was because they “changed the game”. The next step to

reinventing the entertainment industry is cross utilization with the video game industry. The

software that Netflix has developed for content streaming on various platforms can be

adaptable to online gaming. The suggestion is not that they break into video game

development but rather that they pair with an existing, successful company already operating

in video game development. Of course the only threat to this concept is that said merger will

not work and in turn be rejected by consumers, because as of right now there hasn’t been a

company with the financial success as Netflix paired with the distribution channels that Netflix

has established that has attempted such a venture

The company recommended for the partnership is Electronic Arts (EA). EA has been at

the forefront of the video game industry for the past 25 years by creating games with high

quality graphics and engaging story lines. The EA brand is synonymous with gaming quality.

However, the company has fallen short in mobile gaming and struggles to gain traction in said

market, showing that EA has a severe lack of guerilla marketing techniques paired with a

plethora of distribution issues. That being said the partnership will not only benefit EA but also

Netflix.
 For the partnership to be successful EA must have an application within the Netflix

application. Meaning when a user selects Netflix on their digital platform they will have the

option to enter into a secondary app which of course will be EA. Once opened users will have

direct access to the latest EA games.

EA is weak in current generation software but has the capabilities to improve drastically.

The key for their future success is to develop mobile ready games of high caliber; a higher

caliber than its competition and with over 4 billion dollars in revenue in the last 12 months they

have the capital to branch into the ever so profitable mobile gaming sector. By far EA’s biggest

issue is getting their games to the consumers. Using Netflix’s distribution channels they will give

direct access to over 37 million digital subscribers. Another thing to note is that more gamers

are buying their games digitally through their gaming console or phone and relying on cloud

storage. Gamers pay a nominal fee to store their console games on a cloud server which has

proved to be a successful method for games designed for gaming consoles. This new concept

will focus more on mobile device gaming as to not drastically displace their current distribution

network.

As for Netflix, they will be able to bring in new subscribers because of their newly

developed app within an app that will allow users to access the latest gaming content from EA,

which could be considered as the another bonus for subscribers along with the already existing

vast selection of content. By securing the necessary agreements from internet providers for

increased bandwidth Netflix has the capability to support online gaming. If implemented

correctly Netflix can increase revenue drastically and will become associated with another facet

of quality entertainment.
 In addition, a notable benefit to both companies is that their software development

departments will double in size over night. Both have successful R&D departments, and both

have been able to make desirable content for the consumers.

Every successful industry culminates in a “bubble”, and once that bubble bursts a lot of

its members lose substantial capital and in most cases go out of business. By pairing Netflix with

EA both companies will diversify their position in the entertainment markets therein limiting

their overall risk while increasing exposure to the consumer. The app within an app concept is

revolutionary and something that neither of the companies’ competitors are using; once

integrated into each companies’ business models they concept should catapult both companies

to the top of the entertainment industry by now having a revolutionary concept with a

reasonable price.