An evaluation of the environment of Netflix’s business is essential in order to undertake suitable strategies for the growth of internet based entertainment services of Netflix. Netflix’s business required the company to expand to international markets to take advantage of the change in lifestyle and entertainment of the households. The political environment and the state laws were important considerations for Netflix as they had to acquire licenses from the owners of TV shows as well as movie studios for streaming their services through the internet. The environment in the industry underwent technological advancement as increasing number of electronic devices like the cables. fiber optics appeared in the stores. This allowed the households to connect the internet to the household TVs for the purpose of viewing. The social changes also showed inclination of the customers towards easy access to the streaming movies and TV shows on the internet rather and reduced the crowd of the theaters (Fitzroy and Herbert, 2007, p.47).
The internet based entertainment industry witnessed intense rivalry between the several players as they launched their services on unlimited streaming of videos, TV shows and movies to be watched by the customers. Netflix had to adopt business strategies keeping their competitive position in mind. There were new entrants in the industry looking to capture the market. Hulu Plus, Amazon Instant Video are the products of the new entrants that challenged the business of Netflix with similar services.