Posted: February 17th, 2022

Netflix, Inc Situational Analysis

 

 

 

 

Netflix, Inc Situational Analysis

 

 

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Netflix, Inc Situational Analysis

Company Description

You must first register with Netflix to utilize the service. If you subscribe, you will have access to a library of movies and television series that can be watched anytime you choose. Netflix is all you need to get a taste of what the library has to offer. Netflix is free to use and subscribe to (Talebian & Mishra, 2021). Netflix has been utilized by over 130 million individuals in over 190 countries and over 100 languages since its start in 2006.

Along with creating and marketing television programs and even feature films, the firm also provides subscription-based services based on demand (Talebian & Mishra, 2021). In the beginning, they believed that acquiring the company’s stock would have been the best decision. They were wrong. For the first time in company history, Netflix was included on the Fortune 500 list of the fastest-growing companies in 2016 (Mappat, 2020). According to Talebian & Mishra (2021), the corporation rapidly expanded globally. Sales improved by 32 percent over the previous year, reaching $11.6 million (Barrero et al., 2020).

Mission and Vision Analysis

“Entertain the whole world,” Netflix Inc.’s mission statement states. The company’s goal statement includes streaming movies. Corporation: As with the organization’s main aim, its primary goal is to make people happy (Mappat, 2020). If you want your company to continue, you must meet the needs of individuals who visit your site and read your material. Netflix Inc.’s business plan states that the company’s goal is to “remain one of the most known names in Internet entertainment (Mappat, 2020).” This vision statement, included in the organization’s mission statement, details how the business wants to outperform rivals such as Amazon and Walmart (Talebian & Mishra, 2021). According to Mappat (2020), Netflix employees’ principal goal is to provide “unbeatable entertainment” to preserve its market leadership position.

Core Products or Services

Netflix began as a mail-order DVD rental business. It has moved into other entertainment business sectors, including feature films and television programs. Blockbuster’s movie rental service was named after the corporation since it was developed to be a more convenient alternative to Blockbuster’s movie rental service. While the firm continues to deliver DVDs, it grew into a company that provides a variety of entertainment options than when it started. Some of the company’s services are streaming services that one can access from whatever point globally. Residents of the United States may now request DVDs brought to their homes. Monthly subscriptions start at $7.99 for unlimited access to movies and television shows on a single screen, $10.99 for two HD displays, and $13.99 for four HD displays with unlimited high-definition and ultra–high–definition streaming (Thestreet.com). They are subject to change without notice at any time. If you know what you’re searching for, you may be able to find Netflix’s website at www.Netflix.com, depending on your area (Talebian & Mishra, 2021).

History

In reaction to a $40 Blockbuster punishment for late movie rentals, Netflix co-founder Reed Hastings came up with the business model that would eventually become Netflix. This remark was supported by many people (in 2016). Reed Hastings and Marc Randolph, two computer-savvy individuals, came up with the concept of creating a website that would allow consumers to purchase DVDs from the comfort of their own homes in 1997 (Talebian & Mishra, 2021). In 1998, Netflix launched its original website, which is still up and running today. According to corporate records, as of April 14, 1998, there were only 30 persons employed and more than 900 DVDs in stock (Little, 2021). The startup received a $2.5 million investment to get off the ground. It will cost you $4.00 in addition to $2.00 for shipping and handling. A DVD rental for seven days will cost you $4.00 (Talebian & Mishra, 2021). There are several movie options and alternatives, as well as reviews and ideas for films you may like, available on the website for your next DVD rental. Netflix’s value offer is likely to have been the essential factor in the company’s initial success (Mappat, 2020). They were worried that if they went to Blockbuster and discovered that their favorite movie was unavailable, they might rent a third or fourth DVD and return it late, incurring a significant financial loss due to late penalties. Customers of Netflix may utilize the service to purchase a DVD from a retail location using their Netflix account. Specifically, we state in our text that “the utility of simple ownership creates value by diminishing the reasons for individuals not to purchase and raising the incentives for people to purchase (Talebian & Mishra, 2021).” Netflix said that the vast majority of the movies and television series that it stated would be accessible “almost continually” would be available “almost constantly,” according to the company. In addition, the United States Postal Service said that the films would be delivered in a reasonable length of time after they were ordered.

In exchange for the $15.95 annual membership fee, Netflix reduced late fines and moved the expiry dates of select DVDs ahead by one year. From September 1999 until January 2000, this option was accessible to customers. This $15.95 package has been referred to as a “bundle.” The price is just too high! How did it all begin? When it initially began out, the firm they worked for was a tiny one specializing in DVD sales (Mappat, 2020). Many individuals use the company’s internet television service, one of the biggest globally. In addition to streaming, the corporation currently sells and streams entertainment content in three different formats: streaming, DVDs, and international streaming (for both domestic and foreign audiences). In the United States, the phrase “domestic streaming service” refers to a service that allows you to view videos from anywhere in the country, including your own home. Streaming media services are available to customers outside of the United States who want to see the content on their computers. It is referred to as “streaming over the globe (Mappat, 2020).” You may order a digital optical disc (DVD) from the United States and have it delivered to your door (DVD).

Key Current Competitors

Blockbuster and Walmart used to be two of Netflix’s most significant competitors, particularly in the early days of the service’s existence. They have been supplanted by streaming behemoths such as Hulu and Amazon Prime. As a result of the popularity of YouTube stars, the website YouTube is rapidly gaining (Mappat, 2020). These services, such as Netflix, enable you to watch material in exchange for a small monthly subscription cost. Purchasing two or three of them together is less expensive than buying cable or satellite television separately.

Netflix boasts the most extensive movies and television series globally, distinguishing it significantly from its competitors. All three of Netflix’s main rivals are available on almost every device. When traveling, no one has to worry about renting a movie since Netflix, Amazon, and YouTube are all readily accessible when even in a hotel room. Even though Netflix offers competitive pricing and 4K streaming, Amazon was a more significant competition when Netflix initially launched (Mappat, 2020). At the time, Blockbuster and Walmart were the two main competitors. They have been supplanted by streaming behemoths such as Hulu and Amazon Prime. As a result of the popularity of YouTube stars, the website YouTube is rapidly gaining in popularity.

These services, such as Netflix, enable you to watch material in exchange for a small monthly subscription cost. Purchasing two or three of them together is less expensive than buying cable or satellite television separately. According to the company, Netflix has the most material globally, the most content in the whole world (Stelter, 2020). All three of Netflix’s main rivals are available on almost every device. When I am on the road, I do not have to worry about renting a movie since Netflix, Amazon, and YouTube are all readily accessible when I’m in a hotel room (Mappat, 2020). Rates and 4K streaming are available on Netflix, but Amazon offers better prices and incentives and unlimited 4K streaming for free.

SWOT Analysis

Strengths

• Because of the Library material and the large number of DVDs available on Netflix, customers will never run out of things to watch on the service. To maintain its position as the world’s most extensive DVD collection, the firm spends up to $8 billion each year on content, including original series, award-winning shows, and critically acclaimed foreign movies (Stelter, 2020).
• The company’s name. It’s impossible to find someone in the United States who does not have a Netflix subscription. Netflix’s popularity has expanded, attracting new and younger consumers.
• The company’s name. It is impossible to find someone in the United States who does not have a Netflix subscription. Netflix’s popularity has expanded, attracting new and younger consumers.
• No advertisements will be seen. Commercials and commercial breaks have always been a nuisance while watching television; Netflix has made this annoying aggravation inescapable when watching network television.

Weakness

• Many things are true for everyone, regardless of their gender. Over the past several years, Netflix has been steadily extending its presence outside of the United States of America. Although China is a highly significant market for the corporation, it has not done so yet.
• Commercial advertisements generated no revenue (Stelter, 2020). Because entertainment is expensive and Netflix subscriptions are inexpensive, the number of individuals who join and remain with the firm is critical to the company’s long-term viability.
• People can only connect to the Internet in a limited number of places at a time, and they are admitted on a first-come, first-served basis. Several services, such as YouTube, are superior to Netflix since they allow you to download and view videos on devices not connected to the Internet. It is something that Netflix does not qualify for.

Threats

• Competition. Netflix’s business model and profitability may be tested as the firm transitions into the digital era, fundamentally different from the previous one. This new universe offers a diverse selection of materials and pricing options (Stelter, 2020). If Vine and YouTube videos gain in popularity, the company’s strategy and profitability may be jeopardized due to this expansion.
• Utilizing a service based on piracy occurs when someone takes something from another. “It offers an attractive and difficult-to-beat customer proposition: practically all content is free. Providers of content do not allow for the streaming of their work.”
• Disney said in 2017 that Netflix would no longer be able to stream any of its films.

Marketing Plan Focus

My SWOT analysis indicates that adding game shows to Netflix’s content library would be an excellent strategy for swiftly increasing its market share in the short term. Due to the increase in the prevalence of television in the house, network television has emphasized game shows, which have risen in popularity. Let’s Make a Deal, Judge Judy, Family Feud, and Hollywood Squares are just a few of the shows that have become fixtures of the television landscape throughout the previous half-century. In the words of a source, “Celebrity Family Feud, presented by Steve Harvey, has routinely rated as the number one show on Sunday nights for many seasons (Stelter, 2020).” The program’s second season has been renewed for a third season. Game shows are popular with people throughout the globe, but notably in the United States. Unusual Japanese game shows have just been added to the YouTube channel’s collection of oddities. Game shows are more popular than dramas because they are less expensive to create than dramas (Wu, 2019). “The ability to produce many episodes in a single day allows for significant savings in the workforce and administrative costs. In the vast majority of situations, only one individual is held responsible for payment: the host or hostess (Wu, 2019).” According to the company, Netflix’s video game programs may assist the corporation in closing holes in its SWOT analysis that have been recognized as both a vulnerability and a danger to the company. 

While Netflix is well-known for having a low level of advertising revenue, the selling of sponsorships for game show prizes can help the streaming service produce more income in the future (Wu, 2019). According to Netflix, to decrease the risk for content producers while also cutting the cost of generating new content, the company may launch game shows in each market in which it is now active (Stelter, 2020). In addition, it is feasible that Netflix may broadcast well-known game shows from other countries that have a large following in the United States. A famous Japanese game show will most certainly be introduced to a new audience interested in binge-watching it on their computers or smartphones, allowing them to grow their Asian market further.

Segmentation Approach

To choose the most excellent game show material for Netflix binge-watching or producing new game show content, I would employ regional and age group segmentation to narrow down the pool of potential candidates (Stelter, 2020). Due to Netflix’s ambitions to grow worldwide, we will study the market as a whole and segment it by region and country, which will be the United States and Japan in this case. When Netflix starts creating game shows, it will need to appeal to a wide range of demographics to keep viewers’ attention throughout the series. You may advertise on Netflix to millennials and Generation Xers if you want to target a new demographic (Fulgoni, 2018). They are active on social media and prefer to watch films on the Internet rather than on television.

Target Definition

Many baby boomers and older individuals live in the United States, and they are my significant target audience for live-streamed game shows on YouTube. Historically, this group has had difficulty assimilating new technology into their lives (Stelter, 2020). Baby boomers are defined as people born between 1946 and 1964 and are presently between 55 and 75.

Positioning Statement

Netflix will bring you back to a time when your whole family gathered around the television after dinner to laugh, converse, and watch your favorite game shows together. Netflix functions similarly (Wu, 2019). When you were younger, did you often watch game shows like Let us Make a Deal and Wheel of Fortune? While viewing Netflix, chances are you’ll remember a time when your family gathered around the screen for an evening of family fun.

Marketing Mix Details

To get older boomers to sign up for Netflix and watch many game shows, I offer a Netflix marketing strategy that includes four essential parts: product, location, pricing, and promotion. These traits seem similar to Netflix’s current marketing plan (Stelter, 2020). The marketing strategy’s goal is to reach a broader demographic and target audience while still keeping value for the existing audience by distributing well-known and old game shows:

Product: Netflix is now offering a premium subscription option that enables consumers to stream movies and television episodes almost anywhere and at any time. I propose that Netflix add historic game shows from the 1970s and 1980s to their library during the heyday of Wheel of Fortune and Jeopardy (Talebian & Mishra, 2021). Apart from accessing an audience still influenced by network television, such as the baby boomer generation, Netflix’s purchase of game shows represents an incredible chance to create and produce its game shows.

Place: Game shows may be watched on Netflix without interruption and from any home at any time, which is a distinct selling factor. Netflix is the place to go if you want to relive your favorite moments from the 1960s, 1970s, and 1980s, since many iconic games shows from the 1960s, 1970s, and 1980s are no longer available on network television, making Netflix the best option (Talebian & Mishra, 2021).

Price: Every month, it costs a modest amount of money, but it may be canceled at any moment. You can choose how many and when you want to watch game programs. Pricing is available at three levels: $7.99, $10.99, and $13.99 (Stelter, 2020). If you switch off the television as soon as possible, you may save money on entertainment expenses. In addition, a month’s worth of free game shows should be made available to the participants and provided with the opportunity to cancel at any point throughout the month (Talebian & Mishra, 2021). Older boomers may watch as many game shows as they like for a month before terminating their cable membership and saving money on their entertainment costs.

Promotion: Baby boomers are already avid viewers of network and cable television, making this an excellent opportunity to market Netflix’s one-month membership price as well as famous old game programs, as well as new Netflix game shows (Stelter, 2020). There should be a more significant number of print advertisements, newspapers, and coupons sent to households.

Success Metrics

Netflix may analyze the performance of its game show marketing strategy using a range of marketing metrics (Stelter, 2020). The three indicators that best align with Netflix’s monitoring approach are customer perceptions, market share, and lifetime customer value. Netflix is not subject to Nielson ratings since ratings cannot offer user impressions; nonetheless, comments on social media and media sites such as entertainment news and news and magazine articles may benefit (Wu, 2019). The more individuals who talk about or don’t talk about Netflix’s game programs, the more compelling the marketing tactic. Assume the marketing strategy effectively introduces the product to a new demographic (Talebian & Mishra, 2021). Netflix should then examine market share gains over time and compare them to year-over-year fluctuations in market share. Finally, Netflix seeks to gain and retain users for an extended period, if not a lifetime; if market share stays flat or grows, the marketing campaign was successful.

 

The Global Opportunity

Netflix is surely suffering from post-2020 hangover effects. The business lost 430,000 subscribers last quarter in the lucrative UCAN (the United States and Canada) sector, its weakest quarter since 2007. As a result of concerns about local saturation and the launch of new services, future growth is projected to come from overseas markets. Netflix will have 30 million subscribers in 2020, up from 20 million in 2021 and 20 million in 2015. Additionally, growth will accelerate. By 2025, Netflix’s overall membership might reach 360 million, up from the present amount of 209 million. Netflix earned $7.3 billion in the second quarter, with 55% of revenue produced outside the United States and Canada.

 In the three months before UCAN, two million additional customers were added. Additionally, Asia will be the engine for Netflix’s future growth (excluding China, where the service is not accessible). This is unsurprising. India, according to co-CEO Reed Hastings, would have 100 million users. By 2025, the nation will have about 1.4 billion and 900 million internet users, indicating huge potential. Netflix released a low-cost mobile-only package in the country in 2019, and the firm has committed to spending much more in 2020 to produce 40 local episodes and specials.

Additionally, Japan plays a critical role in Netflix’s Asian development ambitions. According to Media Partners Asia, the nation is anticipated to overtake Australia as the company’s largest revenue generator in the Asia-Pacific region this year. Netflix’s ability to create high-quality, regionally relevant content is a significant factor in the company’s growth. Investors are recommended to investigate other investment possibilities in light of the recent halt in membership growth. Apart from that, some of Netflix’s most successful programs, such as Spain’s Money Heist, have a global viewership. Netflix’s future goals are contingent upon its ability to generate compelling tales that transcend borders and languages.

Overseas Considerations

Three sociocultural variables influenced my decision to expand the reach of my Netflix game show marketing strategy into additional regions: population expansion, ethnic and racial variety, and the types of households. Because of their rapid population growth, both India and Asia are global markets with significant economic potential for Netflix to tap into. This capability of broadcasting content that is acceptable for the diverse racial and ethnic groups found in India and Asian countries, whether through permitted US television programs or Netflix original series, is critical when deciding which shows to air on the national television networks. Finally, the types of houses and gender roles within a family substantially influence whether or not a family can pay the monthly Netflix subscription fee.

Conclusion

There is a possibility that game shows, both in the United States and notably in Japan, are making a huge resurgence. Network and cable television have a chance to lose this last piece of television-proven content, allowing Netflix to hammer a final nail in the coffin of pricey conventional network television programming. Until recently, the target demographic for game shows has been a mostly unexplored market for Netflix. Besides increasing its market share by providing current material, Netflix can also develop a limitless supply of new game show programming at a lower cost than creating dramas and without the need for Nielson ratings or other market monitoring systems. Creative programs on Netflix may appeal to viewers of all ages, and Netflix can do so. Game shows are an excellent fit because they are cost-effective, innovative, reach new markets and demographics, allow for international expansion, and provide an opportunity for new revenue streams through game prize sponsorships. What better solution to resolve Netflix’s weaknesses and threats than game shows?

 

References

Fulgoni, G. M. (2018). Are you targeting too much? Effective marketing strategies for brands. Journal of Advertising Research, 58(1), 8-11. http://www.journalofadvertisingresearch.com/content/58/1/8.short

Stelter, B. (2020). Hoax: Donald Trump, Fox News, and the dangerous distortion of the truth. Atria/One Signal Publishers. https://books.google.com/books?hl=en&lr=&id=PKv5DwAAQBAJ&oi=fnd&pg=PA1&dq=In+the+words+of+a+source,+%22Celebrity+Family+Feud,+presented+by+Steve+Harvey,+has+routinely+rated+as+the+number+one+show+on+Sunday+nights+for+many+seasons.&ots=miG3lIAnu5&sig=xX23QrCvYvfTGRDEoxigO8MuB98

Wu, S. (2019). Strategy for Executives: 2019 Edition. Process for Executives LLC. https://books.google.com/books?hl=en&lr=&id=vwqWDwAAQBAJ&oi=fnd&pg=PT5&dq=Netflix%27s+video+game+programs+may+be+able+to+assist+the+corporation+in+closing+holes+in+its+SWOT+analysis+that+have+been+recognized+as+both+a+vulnerability+and+a+danger+to+the+company,+according+to+the+company&ots=mFF6MUTUPW&sig=ZtB1pi0PhN2HxNMqstSbEJxBHR0

Barrero, J. M., Bloom, N., & Davis, S. J. (2020). Covid-19 is also a reallocation shock (No. w27137). National Bureau of Economic Research. https://www.nber.org/papers/w27137

Thestreet.com. https://www.thestreet.com/technology/how-much-is-netflix-14795014

Mappat, N. (2020, September 14). Consumption Behavior of Online Video and Perception of Digital Advertisements among Swedish Millenials. https://www.diva-portal.org/smash/record.jsf?pid=diva2:1466893

Littlechild, S. (2021, December). Exploring customer satisfaction in Great Britain’s retail energy sector Part I: The comparative use of Trustpilot online reviews in four sectors. Utilities Policy, 73, 101298. https://www.sciencedirect.com/science/article/pii/S0957178721001326

 

 

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