Essay on Accounts That Are Distinctive to Both Netflix INC and Amazon.com INC

Published: 2021-07-16 04:04:59
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Netflix, Inc. has a comparable business that is similar to that of Amazon.com, Inc. However, the two companies have accounts that are only distinctive to each of them. Unlike Amazon, Netflix does not derive any revenue from advertising. This is because the company offers content from subscription only. Though Amazon faces more competition from other Google and Face book, it is deriving revenue from digital advertising from its website. Secondly, Amazon gets most of its revenue from shipment of its products. On a daily basis, Amazon receives millions of orders around the globe, and these orders have to be sent to the customers through shipping. It is from this shipping effort that Amazon makes shipping charges from customers. On the other hand, another distinctive account is membership revenue that appears on Netflixs accounts. For customers to view content on Netflix, they are required to pay subscription fees. The growth in its membership has ensured that the company stays afloat as this is the major revenue generating source for Netflix.

Risk Factors

Risk factors are common in companies that deal with the trading of stock at the security exchange. If these risks occur, the business, the financial condition as well as the results of the companys operations for both Netflix and Amazon could be affected negatively. Some of the possible effects include the decline of prices of common stock, and the investors could lose their investment. The two companies face intense competition because the industry is involving. For Amazon, they have to compete with companies that have greater resources, a large number of customers, longer histories and those with greater brand recognition in the market. For Netflix, they have to deal with providing new content and businesses that are offering pirated video content to customers. Netflix also faces liquidity problems in the future because of the costs involved in the long term content commitments they have with providers. For Amazon, their expansion to other places might strain their financial and management resources. Besides they might lack experience into the new markets, they would like to introduce their products. Lastly, Amazon risks facing fluctuations in growth rate and operating results because the company is not able to forecast their growth rate as they rely mostly on sales estimates.

Common Balance sheet and Income Statement Accounts that are Common of Netflix, Inc. and Amazon.com, Inc

Since both Netflix, Inc. and Amazon.com, Inc is in the same industry of providing content to their customers, one of the common accounts they share is the technology and content account. The costs incurred in this account are for research and development of new content as well as in maintaining the existing products. Another account common to the two companies is the intangible assets account. Since both companies can easily be affected by piracy of content, they both require having intangible assets such as copyrights, trademarks, trade secrets and patents. Also, marketing is another important account that is common between the two companies. With the stiff competition from existing and new entrants in the industry, Netflix and Amazon invest more on marketing, thus increasing their marketing expenditures. The need for increasing sales for the company and introducing products in other countries requires intense marketing.

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