Digital platforms organizations are the main tools of transforming theeconomy into a digital economy. They use advanced digital technologies, areprimarily data-driven, and match supply and demand in unconventional and newways. The last century, information technology has deeply reduced the need toown physical infrastructure and assets; it facilitates the platform’s abilityof evaluating and exchanging huge amounts of data, and consequently increasesthe value of the platform. Thistechnology enabled business models to contrast the traditional organizationalforms in the ways they control supply chains, lead a network of platformpartners, and develop business models. Platform businesses bring togetherproducers and consumers in high value exchange. Their chief assets areinformation and interaction, which together are the source of the value theycreate and their competitive advantage (Alstyne, Parker, Choudary, 2016, p. 56).These operating systems do not sell products or services, rather they areselling access to a software and a digital system of reputation and trustbetween supply and demand.
Platformbased business models gave also rise to what is often called the sharingeconomy. The sharing economy refers to the phenomenon which deals with peopleobtaining, giving, and sharing access to goods and services by means of adigital platform. Platform providers can be both for-profit and non-profit. Tounderstand how digital platforms are transforming competition in the sharingeconomy, the paper is going to focus on the following question: to what extent isNetflix 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 beliterature based and the structure of the paper is first dealing with some generalinformation about the organization’s background and afterwards Porter’s Five Forcesmodel is going to be applied to Netflix’s industry, with the aim of determiningthe level of competition in the industry in which it competes. Furthermore, inorder to analyse the digital platform’s influence on the U.
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S. economy, thepaper is going to deal with Netflix’s disruptive impact on it, known as the”Netflix effect”. 2. Theoretical Framework 2.
1General backgroundThe Californians Marc Randolph and Reed Hastings started a businesstogether in 1997 called Netflix. Originally, Marc Randolph’s plan was to offera 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 internetand, in this way, Randolph and Hastings started their enterprise together.
TheNetflix website was officially launched in 1998. Initially, the organizationhad around 30 employees and 925 products ready for use on their site. Netflix’score competency was that customers were sent DVDs via mail and had to pay a feefor the temporarily use of the product (Keating, 2012).