CHAPTER 2: NETFLIX VIETNAM

TITLE: THE IMPACT OF NETFLIX ON THE ENTERTAINMENT INDUSTRY IN VIETNAM

2.2.a. Business Environment Analysis by PESTLE

The PESTLE analysis will address the external macroeconomic environment which are political, economic, sociological, technological, environmental, and legal factors. Political factors that impact or could potentially impact the business. These political factors can be local, national, or international. For Netflix Vietnam, under the aspects of political evaluation, Vietnam government is monopoly and stable over the period since Communist Party is the only Party that legislated by Vietnam constitution. However, as international level, Vietnam has open to apply its policy toward international trade agreement such as EVFTA, WTO, etc. This might be beneficial to Netflix Vietnam business as Vietnam policy maker will consider intellectual properties and products such as Digital media and products. Economic Factors that impact to Netflix Vietnam business can be listed. On the upside, the GDP growth stably over the past 10% at the average rate of 6%, and despite Covid-19, GDP was still positive 2.6% (data.worldbank.org, n.d.). Vietnam ranks second largest internet economy in ASEAN (Thng, n.d.). Furthermore, the pandemic has shifted the consumers behavior toward digital and internet media positive increasing. On the downside, the risk of exchange rate from Vietnam Dong to U.S. Dollar is stagnating, pushing the import price in uncertain situation. Sociological factors that impact Netflix can be listed as young population which has around 60% belonged to Generation X, Y, Z and Millennium. These youngsters open to the trends of internet streaming and digital products in which Netflix is doing the business. The awareness of Intellectual protection is increasing leading to the increase of paid subscribers. However, Vietnamese people in rural and countryside are still preferring to use digital channels freely with advertisement like TikTok, Facebook and Y-Tube. The diversity of Ethics in Vietnam is also a major factor to consider. Vietnam has 54 ethics who speak in several different languages. The Kinh ethics accounts for 85.3% (Britannica, 2019) that speak Vietnamese. This diversity in cultures, ethics may lead to difficulties to develop the product contents that suits cultures and interests. On the technological factors, Vietnam has covered mostly 4G network in telecommunication. The monthly internet subscription fee is cheap and affordable for most Vietnamese. Since the government supports digital telecommunication, it is hardly to find the analog devices in Vietnam household. The fintech (financial technology) industry is growing strongly, which helps payment easier for digital subscription. The legal factors are including the intellectual properties legislation and practices are in their fancy stage. Cyber security is a major concern. Finally, the content approval to broadcast is still subject to the will of authorization. With more and more young people care about Environment, most electronic devices have to be verified as energy efficiency from one-star to five-star rating level. In summary, PESTLE analysis gives positive overview for Netflix Vietnam to be in the market. Nevertheless, to be success in this competitive market, Netflix Vietnam shall take SWOT analysis.

2.2.b. Business Understanding Analysis by SWOT

The SWOT analysis is a methodology to understand the business itself toward its internal strengths, weaknesses, and external opportunities and threats. Netflix strengths are abundant capital to invest in the market, experienced and capable human resources, and innovative working environment. Netflixs weaknesses are relating to content diversity of culture and language in Vietnam. With the current weak content Vietnamese producers that meet Netflixs standards of production, it is not easy to create localized contents to reach out to countryside customers. On the other hand, there are plenty of opportunities such as the drastic growth in digital media consumption with large and young population to penetrate the digital content market. Another opportunity is technological infrastructure development have been catching up with large scale and higher speed of internet. These opportunities come with threats which are cultural, historical and sensitive contents to be banned from authorizations. The threats of account sharing scam and privacy risks are major. In conclusion, the strengths and opportunities outweigh weaknesses and threats. Netflix Vietnam shall use its strengths to take opportunities, reduce the weaknesses in parallel with the carefulness of threats.

2.2.c. Business growth strategy Analysis by Porter Five-Forces

The Porters Five Forces tool is helpful to assess the attractiveness of an industry or a market by analyzing the forces acting upon it. They are threat of new entrants, bargaining power of buyers, bargaining power of suppliers and threat of substitute products. Netflix Vietnam sees the threat of substitute products significantly high. There are many substitute contents such as unofficial sources of digital media, online streaming service, unlicensed download pages and torrent download. Y-Tube is the biggest competitor, which offers the contents freely with advertisement running in the contents. The substitutes can be listed as Apple TV, VieOn, Galaxy Play, OTT service, FPT Play, ClipTV, VTV Go and unlicensed and illegal digital camera.

2.2.d. Business product development planning by Ansoff matrix

The Ansoff Matrix was developed by H. Igor Ansoff and first published in the Harvard Business Review in 1957, in an article titled "Strategies for Diversification." It has given generations of marketers and business leaders a quick and simple way to think about the risks of growth (H Igor Ansoff, 1957) Sometimes the Ansoff matrix is called the Product/Market Expansion Grid, the Matrix shows four strategies: Firstly, Market development strategy with new market and current products. New market is more about rural and countryside. At this segment, Netflix may not focus in short term because there is plenty room to compete in the urban and major city market like Ho chi Minh, Da Nang, Ha Noi and other tourist cities. Secondly, diversification strategy with new market and new products is not appropriate at the moment or even at the long run. Netflix Vietnam will not pursue this strategy. Thirdly, it is market penetration strategy with current product and current market. Netflix Vietnam is still fighting to gain market share against Y-Tube, unlicensed digital contents, local streaming service like FPT play, VieOn, Galaxy play et cetera. Netflix will use its financial strength to penetrate the market with current contents which focus on Korean and Asian movies and series. For movies, Netflix will deliver to Vietnam market as the same time with other regions so Vietnamese subscribers will have a feeling of trending update. And finally, product development strategy with new products and current market is suitable for long run. At first, Netflix will penetrate the market as we have discussed. Later, Netflix will produce more local contents, local movies, and series. We have seen some Vietnamese contents that Netflix bought from Vietnamese producers such as Mt Bic, documentaries about Son Tung MTP, a famous Vietnamese singer, and so on. More and more Vienamese contents are presentedon Netflix now in Vietnam.

2.3. Strategic Planning for next move

After evaluation the macroeconomic situation using PESTLE, the business insight by SWOT, the forces impacting to business by Porters Five-Forces, Netflix Vietnam comes up with the strategy to penetrate the current market with current contents focusing on Korean dramas for housewives, buster movies for teenagers and youngsters, documentaries for men and older viewers, and cartoon for kids. Netflix is now creating more and more local Vietnamese to prepare for the shift to product development strategy.

2.4.c. Sales channels development

Vietnam is the country which 97% of the population uses smartphones, the average online time is 6 hours 47 minutes per day, 3 hours for streaming content. Market penetration rate of Netflix in Vietnam from 1st to 4th quarter of 2021 21% of respondents of a survey conducted among internet users in Vietnam used Netflix as a streaming service while FPT Play was the leading streaming service. Video streaming service in Vietnam: On average, one Vietnamese watches tv and streamed or on-demand content daily in average 3 hours per day. Vietnamese do not mind watching advertisements if they can watch their favorite videos freely. This is why Y-Tube is still the leading free streaming service in Vietnam. FPT Play and Netflix are two biggest paid streaming services in Vietnam.

Monthly streaming platform subscriptions in Vietnam: MyTV: from VND 22,000 (0.96c) to VND 50,000 ($2.19) per month Galaxy Play Premium package: 60,000VND ($2.63) per month FPT Play family packages or VIP packages: from VND 50,000 VND 140,000 ($2.19-$6.13) per month Netflix: from VND 180,000 VND 260,000 ($7.88 - $11.38) per month The following is Marketing budget & Sales channels development, showing money now functions. This preliminary calculation has been done in an effort to satisfy pure academic purpose, hence many factors have been simplified for sake of simple projection.

The sales plan in 2023 will be done with 5% of the accounts dropped out, and the remaining new accounts will be generated from branding activities & digital marketing activities. Netflix sales channels in 2023 based on digital channels which focus on Google, Facebook, TikTok, and Zalo. And the amount will be spent per new Netflix account is VND 65,371.

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QUESTIONS:

5. Data collection procedure

-Data strategy: It presents the sources of the data.

-Procedure: It describes how the data will be collected.

6. Data processing and analysis strategy

-State the data processing method

-Mention the data analysis method

7. External and internal validity

-Confirm the correctness of the study design by highlighting its internal validity. Internal validity is a confirmation of the correctness of the study design. It is the degree to which a researcher can guarantee that the only entity influencing the dependent variable was the independent variable. There can be threats to internal validity during data collection, or during the duration of research, which should be explained.

-Confirm the large-scale applicability of your research by highlighting the external validity. External validity is the extent to which a studys results can reflect similar outcomes elsewhere and can be generalized to other populations or situations.

8. Limitations of the study

-State any limitations, restrictions, or constraints that may impact the study or affect the validity (i.e., internal or external) of the outcome.

9. Conclusions with the research methods

-Summarize the research design and methodology chosen for the study. It will show how all the parts of the research project work to answer the study's central questions.

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