Growth Strategies and Market Entry of Netflix: A Critical Business Analysis

This document provides a critical analysis of the growth strategies used by Netflix influenced by globalization drivers. It also compares and evaluates the market entry strategies used by Netflix in India and UK. Furthermore, it explores the opportunity for expansion of Netflix into another Asian market and suggests sustainable approaches for long-term success.

CRITICAL BUSINESS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Growth strategies used by Netflix influenced by globalization drivers..................................1
2. Comparison and evaluation of the market entry strategies used by Netflix in India and UK.2
3. Opportunity for expansion of Netflix into another Asian Market...........................................3
4. Sustainable approach...............................................................................................................4
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Critical business involves challenges faced by the business while launching the product to
the market. There are various challenges faced by the company such as competition challenge,
cost, quality etc (Abbiss, 2019). Netflix is spread around 190 countries and was founded in the
year 1997 by Reed Hasting who is CEO of the company as well. In the study growth strategies of
the Netflix are discussed. Entry strategies adopted by Netflix in India and in UK are studied. The
opportunity that Netflix took in order to expand its business in UK and India and the best
strategy which can be used by Netflix in order to expand in other Asia market is discussed.
MAIN BODY
1. Growth strategies used by Netflix influenced by globalization drivers.
For Netflix the main driver for the growth is the advancement in the technology which
helped the company to expand across 190 countries. There are basically four drivers for
globalization and the same are as follows:
Technological Drivers
Growth strategies used by Netflix was global expansion and rule the world and the
strategy influenced is the innovation strategy. At earlier time TV cables and Radio were having
there rule in the market. Netflix took advantage of the internet and started their own Web series
which was more convenient to be seen over the mobile phones, TV and other devices.
Cost Drivers
Driver of Globalization which influenced globalization strategy of Netflix was
penetration strategy and multi language videos which provides quality content and is better than
the local and national series (Aversa, Hervas-Drane. and Evenou, 2019). Netflix made access
available of those videos all over the world. The video of the Spain now can be seen in USA or
the web series of the Spain now can be seen in USA in English language. The video of French
language web series can be seen by German in their own language. The main thing among this
driver was all of these things were available at cheap cost and also this influenced the growth
strategies by increasing the number of customers of Netflix all over the world.
Competitive Drivers
Growth through diversification was the strategy which was influenced by this driver. The
concept which was introduced by Netflix was completely new in the market which outnumbered
the old concept. The new concept influenced the growth strategy of the Netflix by giving
1

competitive advantage to Netflix. Globalization of the company made the company famous and
the same resulted making the company popular in the market. The quality of the content was
amazing and the speed of the internet was also very good. All of these facilities were available at
lower prices as compared to traditional Direct to home channels. One just have to pay for the
internet connection and subscription, and they can serve the web series at their own comfort. All
these factors gave the company competitive advantage in which the company was benefited by
the influencing growth strategy in which the Netflix was expanding its business.
Market Drivers
The Growth strategy which got influenced of Netflix is the Acquisition strategy in which
the company started the small competition (Barker. and Wiatrowski, 2017). The company which
was giving high competition to the Netflix was acquired by Netflix. This helped the organization
to expand and make become more competitive in the market.
2. Comparison and evaluation of the market entry strategies used by Netflix in India and UK.
Comparison
UK
Subscription strategy is used by Netflix in which the company focused on increasing its
subscriber in UK. This entry strategy helped Netflix to increase the subscribers in which the
company provided free subscription in the first month (Finn. and et.al., 2018). For increasing the
subscribers the company focused towards the marketing and Netflix used the video marketing
strategy in which the ads were shown over you tube. Netflix targeted popular you tube channel
and popular TV shows where there was great amount of traffic of the UK audience. The strategy
used by the company under the digital marketing is 80% and 20%. As per this strategy if there
are 80% views then the conversion will be 20% of audience.
Advanced internet strategy, as per this strategy advance internet speed was already
available in UK and the same resulted in serving the audience of UK fast and quality content,
this helped entry in the market of Netflix (Forthun, 2019). The Netflix saw this thing as an
opportunity because the company was having its product which is already made, and they just
have to deliver the product. Advance technology helped Netflix by providing HD quality videos
in which the viewers can view the videos by feeling the videos and the effects in the videos.
India
2

India is a huge market and around half a million users were having internet access that
time but the audience were largely dependent on Cable operators and DTH (Horeck, Jenner. and
Kendall, 2018). Penetration strategy was used to enter the market in which the price which was
competitive was changed from the audience and the same helped Netflix gather around 400
million subscribers who were ready to pay and Netflix was and also now in trend. At the initial
time of the entry the price were kept at the global standard but afterwards India prices were
adopted. This happened because it was a complete failure. It was a challenge to enter into the
Indian market as the speed of the internet was poor. But Netflix entered into the India market
seeing this as an opportunity, the company targeted young audiences as they were having high
rate of influence under the gathering of 400 million users majority of them were young people.
Evaluation
Evaluating UK market with the India market, the India market was more towards
gathering high rate of subscribers whereas UK market was much focused towards high revenue
generation. The Indian market was challenging whereas UK market was already having advance
internet facilities in which the people were ready to pay for the innovation.
3. Opportunity for expansion of Netflix into another Asian Market.
Netflix is having a tremendous and great opportunity to capture other Asian market such
as market of Thailand, market of Indonesia and others. It can be possible if the company is able
to covert the way the people used to think towards the video movies and the web series. As per
the study it is found that there are around 171 million Asian users of the TV shows and movies.
The data has not included India and China (Karpagam. and Suganthi, 2016). It is a great
opportunity for Netflix to capture that market by increasing its advertisement budget towards
those nations using the platform over which the audience used to watch the TV shows and
videos. Netflix must cut its prices for the initial period and thereafter gradually increase its price
which is acceptable. Netflix must also focus on high GDP nations like Japan and South Korea
because it is a developed market which can drive more revenue and increase the profitability of
Netflix. Netflix can use the local artist for the local language people which will help them make
the customized series and the same will result in making the customers more indulging and make
will them more confident to invest.
In order to grab the Asian market Netflix must use locals for the advertisement which
will give a clear understanding of the shows which the company is wishing to launch or running
3

over their platform (Laudon. and Traver, 2016). In the Asian market the company must focus on
mediums which can provide high rate of customers such as social media, websites and blogs. For
the purpose of the expansion of the business the company must focus on advertisements over the
cinema. This will help them convert the audiences which are gathered in the cinema hall into
their business. Asian market is a growing market and it is a great opportunity for Netflix to enter
into the market where the people are ready to invest.
4. Sustainable approach.
One sustainable approach which can be adopted by Netflix in order to expand its
operation in the Asian market is the approach known as launching lower price plan at the initial
period. This approach is the best approach for the long run of the business and will help the
company to give competition to the local as well as international market (Wayne, 2018). Initially
the company should focus on providing the required features and then should focus on providing
premium features which include expensive plans. If the company fails to gather much amount of
audience then the Netflix should focus on offering various discounted offers which attracts the
users and drives then to purchase subscription. There are various offers available and the same
must be applied as per the occasions at which the audiences are available. For example the
discounted price will be offered only when there is lack of gathering of the customers but if there
is gathering in bulk then premium prizes must be charged from the audiences.
This strategy is also known as price penetration strategy in which initially the price is
kept low and then the price is increased because the customers will be ready to spend higher
prices due to the addiction. Under the sustainable approach the price of the plan must be set
considering what are the prices charged by the competition over there in that market. After
considering the price charged over there the prices must be charged which is lower than the price
charged with the movie or channel.
CONCLUSION
As per the study it is concluded that Netflix has changed the concept of how the people
used to think about the cinemas. Netflix used prominent and premium strategies which made the
company to stand out of the competition. Different market needs different strategies and Netflix
must focus on adopting the strategy which is required in the market. India is having large market
whereas UK is having income generation market. There is a great opportunity for Netflix
4

towards the expansion of the business in Asia. Using the sustainable approach know as lower
priced plan the company can gather high rate of customers.
REFERENCES
Abbiss, W.S., 2019. Book Review: We Now Disrupt This Broadcast: How Cable Transformed
Television and the Internet Revolutionized It All.
Aversa, P., Hervas-Drane, A. and Evenou, M., 2019. Business model responses to digital piracy.
California Management Review. 61(2). pp.30-58.
Barker, C. and Wiatrowski, M. eds., 2017. The age of Netflix: Critical essays on streaming
media, digital delivery and instant access. McFarland.
Finn, A. and et.al., 2018. The Ultimate MBA Book: Get the Edge in Business; Master Strategy,
Marketing, and Finance; Enjoy a Business School Education in a Book. Hachette UK.
Forthun, E., 2019. Book Review: From Networks to Netflix: A Guide to Changing Channels.
Horeck, T., Jenner, M. and Kendall, T., 2018. On binge-watching: Nine critical propositions.
Critical Studies in Television. 13(4). pp.499-504.
Karpagam, P.U. and Suganthi, L., 2016. Exploring the critical success factors affecting the
performance of management institutions. International Journal of Business Innovation and
Research. 10(4). pp.453-477.
Laudon, K.C. and Traver, C.G., 2016. E-commerce: business, technology, society.
Wayne, M.L., 2018. Netflix, Amazon, and branded television content in subscription video on-
demand portals. Media, Culture & Society. 40(5). pp.725-741.
5