Netflix Background | Assignment

Netflix background
As a pioneer in offering internet-based multimedia streaming and subscription services, Netflix
Inc. is a significant media organization. The company's main line of business is the provision of
DVD postal distribution services and Netflix subscription streaming services for movies,
documentaries, and TV shows available online. Netflix is a streaming service that caters to both
domestic (US-based) and international customers and deals with the delivery of its own
programming content (Netflix Originals). TV series are accessed under agreements from various
film distribution companies and television broadcasting companies in exchange for a monthly
subscription fee that the subscriber is responsible for paying.
Marc Randolph and Reed Hastings established Netflix in California in 1997. They had the
concept while traveling between their Santa Cruz home and Hasting's business, Pure Atria,
where Randolph was the director of marketing. One of the earliest online DVD rental businesses
in the world, Netflix was established in April 1998 with a selection of less than 1,000 films and
booklets. ", a wordplay on "flick," which denotes a motion picture. However, during the
following ten years, Netflix noticed a downturn in the DVD rental industry and quickly modified
its business strategy. They ceased delivering hard copies and created an online library of books
that everyone could access from the comfort of their own homes at any time.
A maximum of 18 hours of free streaming per month, dependent on the user's membership, and
only working on PCs and Internet Explorer, video streaming was introduced in 2007 with just
1,000 titles. Netflix had 7.5 million customers at the year's conclusion.
By 2016, Netflix had reached 190 additional nations and was providing content in 21 different
languages. And the business would go on to win Academy Awards for several of its unique
works in the years that followed. Netflix is altering not only its business strategy but also how
individuals get video content.
Main driver of activities
The majority of Netflix's revenue comes from membership fees for use of their streaming
services. The monthly charge for a membership to a video streaming service is $9.99 for the
entry-level plan, $15.49 for the standard plan, and $19.99 for the premium plan.
For US members that directly sign up for the service, Netflix still offers its incredible selection
of DVDs and BlueRays. The basic plan costs $9.99, the standard plan is $14.99, and the
premium plan is $19.99, according to the business.
Currently, Netflix (NFLX) is a publicly traded business listed on the NASDAQ market. In 202,
the firm went public at a share price of $15. The company's shares were worth roughly $244 in
August 2022. The market capitalization as a result is $108.5 billion.

Competitive advantage
- Differentiating your product from its competitors is one way to beat them.
- Customers’ willingness to pay.
- Unfair treatment by price.
- Prices that are bundled with services.
- Capital as a concept that should be recognized.
SWOT analysis
Strenghts
• Brand: The reputation and brand of Netflix are strong. It ranks as the 26th most valuable brand
in the world in 2020, although its worth increased by the greatest (72%) from 2019 and 2020.
Additionally, it is the fourth-rated brand in 2019;
• Development: Netflix has expanded significantly over the last 10 years, showing that it is
present in 190 nations;
• Customer base: With more than 180 million customers, the corporation has significant
negotiating leverage with studios;
• Content: It has been making high-caliber films and TV series that draw crowds. It also defeated
conventional networks in nominations for awards;
• Adaptability: It changes the service in accordance with the demands of the market and evolving
technology
• Cost: Netflix's plans are reasonably priced and provide excellent value. It offers a greater range
and is more affordable than cable TV or going to the movies.
Weakness
• Copyrights: The business only possesses a small amount of copyright, and the content rights it
licensed from other studios expire after a certain period of time, enabling access to the material
on other platforms;
• Market over-dependence: Although Netflix has a global presence, around 50% of its income
comes from the North American market. Additionally, the absence of original material in a
number of nations reduces demand outside of America;
• Costs: Due to the enormous financial demands of its worldwide presence, its debt grows yearly.
It reported having $14.17 billion in debt as of April 2020;

Sustainability: Netflix hasn't yet used renewable energy, unlike other tech businesses like
Amazon, Google, and Apple, which has a detrimental effect on its reputation.
• Strict pricing: With only three plan choices, Netflix does not give much personalization.
Additionally, it has increased its costs while those of competing streaming services have
decreased significantly.
Opportunities
• Expansion: It is still possible to reach many additional nations, including China, where the
service is not yet offered. The business could get into tactical alliances in the neighborhood to
strengthen its footprint in new markets;
• Ad-based business model: Although Netflix has rejected this conventional business model,
many other service providers generate billions of dollars in revenue from advertisements; •
Mobile option: The company can provide a more affordable option with a mobile-only plan in
order to expand internationally and compete more effectively against less expensive rivals;
• Regional content: Many nations have found regionally customized material in native languages
to be beneficial;
• Original Content: Its exclusive content may include other product lines, such as video games or
comic books;
• Annual Subscription: This annual subscription with a discount over the monthly fee can
encourage users to switch to an annual plan, avoiding Netflix subscribers from losing out when
they cancel right after watching their favorite show.
Threats
• Competitors: The number of streaming services has been increasing globally, and these
competitors include well-known brands like Netflix;
• Rules: Strict government laws, such as China's ban on foreign content, may prevent expansion;
• Piracy: Thousands of people continue to discover ways to download illegal content, and several
people simultaneously share one account;
• Market saturation: An excessive reliance on North America, where base growth has already
slowed, might lead to market saturation;
• Hacking: As more Netflix accounts are compromised, users may switch to competitors if this
trend continues.