Digital platforms organizations are the main tools of transforming the
economy into a digital economy. They use advanced digital technologies, are
primarily data-driven, and match supply and demand in unconventional and new
ways. The last century, information technology has deeply reduced the need to
own physical infrastructure and assets; it facilitates the platform’s ability
of evaluating and exchanging huge amounts of data, and consequently increases
the value of the platform.
technology enabled business models to contrast the traditional organizational
forms in the ways they control supply chains, lead a network of platform
partners, and develop business models. Platform businesses bring together
producers and consumers in high value exchange. Their chief assets are
information and interaction, which together are the source of the value they
create and their competitive advantage (Alstyne, Parker, Choudary, 2016, p. 56).
These operating systems do not sell products or services, rather they are
selling access to a software and a digital system of reputation and trust
between supply and demand.
based business models gave also rise to what is often called the sharing
economy. The sharing economy refers to the phenomenon which deals with people
obtaining, giving, and sharing access to goods and services by means of a
digital platform. Platform providers can be both for-profit and non-profit.
understand how digital platforms are transforming competition in the sharing
economy, the paper is going to focus on the following question: to what extent is
Netflix influencing competition in its industry and in the U.S. sharing economy?
To come up with an answer to this main theme, the research method will be
literature based and the structure of the paper is first dealing with some general
information about the organization’s background and afterwards Porter’s Five Forces
model is going to be applied to Netflix’s industry, with the aim of determining
the level of competition in the industry in which it competes. Furthermore, in
order to analyse the digital platform’s influence on the U.S. economy, the
paper is going to deal with Netflix’s disruptive impact on it, known as the
2. Theoretical Framework
The Californians Marc Randolph and Reed Hastings started a business
together in 1997 called Netflix. Originally, Marc Randolph’s plan was to offer
a product or service over the internet. One day, his business partner, Reed Hastings,
had to pay a charge fine of $40 because he returned a copy of a film too late.
He then suggested to his partner to start renting out movies on the internet
and, in this way, Randolph and Hastings started their enterprise together.
Netflix website was officially launched in 1998. Initially, the organization
had around 30 employees and 925 products ready for use on their site. Netflix’s
core competency was that customers were sent DVDs via mail and had to pay a fee
for the temporarily use of the product (Keating, 2012).