This Netflix Case Study we look how Netflix transformed from just a company for DVD rentals to a global entertainment streaming giant. The analysis brings in some very interesting insights into the growth story and the hurdles in strategy moves that put it at the top.
Company History
Netflix was founded in 1997 with a groundbreaking idea: allowing users to rent DVDs by mail. Though at that point in time, the DVD rental market was comparatively small as many people were still using VHS tapes, Netflix identified the potential and made full use of it by introducing innovation. They introduced their “no late fees policy” in 1999, and from then on, it was a game changer. By 2001, Netflix was already setting the next goal—Video on Demand.
Current Situation
Fast forward to 2007, and Netflix had grown into a billion-dollar company with nearly $64 million in cash flow. Demand for VOD, Pay Per View, and streaming services increased, but Netflix wrestled with a number of issues, including how to get content and how to connect computers to television sets. Despite this, Netflix had invested heavily in VOD to the tune of $10 million in 2006 and $40 million in 2007.
Mission and Vision
Netflix did not have a well-defined mission statement yet but had a clear vision. Netflix envisioned becoming the best global entertainment distribution service. Their goals included:
- Licensing content worldwide
- Making markets accessible to film producers
- Helping content companies find their audiences worldwide
Netflix also based its operations on values such as judgment, productivity, innovation, and honesty to help its employees and service providers to make the correct decisions.
The Netflix Revolution
Netflix continued to change as it improved over the others. They moved from renting DVDs to a subscription-based streaming model and even put in place a brilliant recommendation system on their website. They continued to grow their inventory of DVDs available for rent online. Eventually, these were the greatest factors of success.
SWOT Analysis
Strengths:
- Subscription-based model
- Unique recommendation system
- Wide selection of DVDs
- Fast delivery times
Weaknesses:
- Popular new releases always out of stock
- Subscription plans are unattractive for light users
- DVDs easily damaged or lost in the mail
- Purely focused on DVDs as VOD grows
Opportunities:
- International expansion
- Growing VOD services
- Original content
- New lines, such as video games or educational material
- New subscription options for light users
Threats:
- Blockbuster and other VOD
- Limited VOD to preserve the DVD model
- Lack of DVDs by mail due to piracy concerns
Target Customers
Netflix targeted customers that were males and females from the 17-60 age demographic with household incomes of $30,000 and up. They catered to a broad audience, including:
- Professionals
- Film buffs and other repeat customers
- Innovators
Competition
The primary competition for Netflix in 2007 was Blockbuster, Vongo, CinemaNow, and the traditional cable/satellite companies. The competitive entry was the scariest, especially considering how quickly VOD had begun to gain traction.
Target Market
Netflix was positioned as a value, ease of use, and content-wide brand. This positioning helped them stand out from the competition and attract a loyal customer base.
Pricing Strategy
Netflix had at their disposal different pricing models to meet the needs of different customers:
- Pay-per-movie: $4 + $2 shipping and handling
- Prepaid subscription service: 4 movies at a time, 4 new each month
- Unlimited rental: 3 movies at a time, unlimited exchange
Promotion Strategies
Netflix also introduced an array of promotional offers such as:
- Cross-promotions with DVD player manufacturers
- Theater ticket offers
- Commercials and radio spots
- Banners and pop-ups
- An affiliate program with free trial offers
- Word-of-mouth marketing
Key Challenges and Decisions
The most critical challenge before Netflix was choosing the right VOD model and the marketing approach while continuing to rule the home video market. They considered a few:
- Provision of rating and recommendation systems to cable companies
- Online Video Streaming for no extra cost to current customers
- Launching a separate online video business
Critical Issues Addressed by Netflix
Netflix needed to address some critical issues:
- Competing in the VOD market
- Acquiring content and addressing piracy concerns
- How user adoption is driven and the sound financial investments to be made
- Financial investments and managing employee roles when two business models are used
Recommendations
For Netflix to remain competitive, they had to:
- Invest more in technology quickly
- Provide easier and cheaper access to future content
- Provide online streaming at no extra cost to current subscribers
- Keep up a robust recommendation engine to improve user experience
Future Strategy
To drive the company more netflix case study further, Netflix’s future strategy should involve a few important points:
- To enhance penetration of technology, have partnerships with every TV manufacturer, game console, and DVR to increase
- The creation of original content: Films and TV shows
- International expansion
- To reach more countries, develop different pricing policies that would attract more customers
- New product with innovation: like an iPad
Conclusion
As we see from the Netflix Case Study, Netflix has turned from a DVD rental service provider to one of the world’s leading streaming businesses. Thanks to innovation, a good understanding of customers, and smart investments, Netflix is now seen as a world leader in entertainment.
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FAQs About Netflix Case Study
What was the conclusion of the Netflix case study?
The conclusion of the Netflix case study would be on how Netflix had moved from being a DVD rental service to the future of something that will be huge, global, with major growth and new technical innovation, customer-led service, and strategic investment.
Why is Netflix so successful?
The strategic turn towards online streaming, investment in original content, user-friendly recommendation, and continuous technological improvement are the underpinnings of Netflix’s strategy for success.
What strategy does Netflix use?
Customer-centric, diverse content, investment in original programming, and continuous improvement in streaming technology—all of these sum up as Netflix strategy.
What problems does Netflix solve?
Netflix solves the problem of convenient access to a large library of entertainment content, eliminating the need for physical rentals, taking away late fees, and solving the problem of limited content.
What is case about on Netflix?
The case study about Netflix describes its journey from a DVD rental company to become a global streaming giant: strategies, challenges, and many key decisions that minted this success story.
What is the short paragraph about Netflix?
Yes, Netflix began in 1997 as a DVD rental service and morphed into what has become an international streaming service. It revolutionized the entertainment industry by making content on demand and through creative original programming.
Who is Netflix main competitor?
The main competitors of Netflix are believed to be other streaming services like Amazon Prime Video, Disney+, Hulu, and HBO Max.
What is the secret of Netflix’s success?
The key elements of Netflix’s success can be seen as adaptability, an investment in original content, a reliance on data-driven decision-making, and a willingness to always give each user what they need.
What’s special about Netflix?
The content library itself is really deep: it has plenty of exclusive original shows and movies, a powerful recommendation algorithm, and relevant content for targeting diverse international audiences.
What are the weaknesses of Netflix?
Among others, overdependence on content licensing, increasing competition in the streaming market, and challenges related to subscriber retention and content piracy.