Netflix Digital Revenue Streaming: Analysis of Options and Strategies

This report provides an analysis of Netflix's digital revenue streaming model. It begins with an introduction to Netflix as a global video streaming business and highlights its transition from DVD sales to original content streaming. The report then delves into the pros and cons of the subscription-based reve...Read More

NETFL
IX
Digital Revenue Streaming: Options and Recommendations

INTRODUCTION
 Netflix is one of the largest global
video streaming business that
boasts millions of subscribers
worldwide.
 Starting from DVD sales business,
Netflix now streams original video
contents, movies, TV shows and
many others.
 This presentation basically focusses
on the pros and cons of digital
revenue stream options and
recommend one specific option for
Netflix.

PROS OF DIGITAL REVENUE STREAM OPTIONS
 For digital revenue stream, Netflix follows subscription based
model in which, majority of the company’s income is
generated from the user subscriptions.
 Netflix provides wide range of subscription offers that the
users can also cancel anytime, which is very convenient for
the users.
 The main pro of this model is that the company can provided
uninterrupted ad-free streaming of videos and movies that
increases satisfaction and experience of the customers.

PROS OF DIGITAL REVENUE STREAM OPTIONS
 The revenue stream system of Netflix is customer centric and
provides benefits to customers.
 Since Netflix is completely ad-free, it does not sell its user data
to other advertising agents unlike some other competitors in
the market.

CONS OF DIGITAL REVENUE STREAM OPTIONS
 One of the major cons of the digital revenue model of Netflix is
that there is no scope of additional income for the company
other than the subscription earnings.
 Another con of the model is that this model does not support
the continuous growth of the company including development
of original content that requires significant amount of funding.

CONS OF DIGITAL REVENUE STREAM OPTIONS
 Another con of the digital revenue stream of Netflix lies in the
subscription plan where it provides one month free trial before
initiation of paid subscription to all its customers.
 This free trial month allows the customers to access all the
contents that are available in the Netflix library.
 This free trial month system allows the users to misuse the
Netflix services by cancelling subscription after free month
and open a new account for getting another free month – thus
effectively being able to access all the contents of the library
without making payment.

RECOMMENDATION
 There are several revenue models that
Netflix can follow to increase the
generation of digital revenue is by
showing ads during the streaming of the
videos.
 Online advertisements are genuine and
effective means of generating digital
revenue as evident from the sites like
YouTube.
 However, too many ads interrupting
videos will risk dissatisfaction from the
customers and hence, this will require
strategic but effective implementation.

DIGITAL REVENUE STREAM USED BY
A COMPETITOR
 One of the major competitors of
Netflix in the market is Amazon Prime
Videos.
 The digital revenue stream is based
on monthly or yearly subscription but
there is also an option to receive
subscription offer if Amazon website
users purchase Amazon Prime
subscription for faster and cheaper
product delivery.
 Thus, Amazon Prime’s digital revenue
stream is similar but has multiple
outlets for earning the revenue.

CONCLUSION
 In spite of the global success of Netflix, it cannot be said that
their online revenue streaming model is flawless.
 Due to the flaws, Netflix has started generating significant
amount of losses.
 Furthermore, major competitors like Hulu, Amazon Prime
Videos and others have started to take hold of video streaming
market.

REFERENCES
Fan, J., & Griffin, C. (2017). Optimal digital product maintenance with a
continuous revenue stream. Operations Research Letters, 45(3),
282-288.
Ross, J. W., Beath, C. M., & Sebastian, I. M. (2017). How to develop a
great digital strategy. MIT Sloan Management Review, 58(2), 7.
Schallmo, D., Williams, C. A., & Boardman, L. (2017). Digital
transformation of business models—Best practice, enablers, and
roadmap. International Journal of Innovation Management, 21(08),
1740014.
Trabucchi, D., Buganza, T., & Pellizzoni, E. (2017). Give Away Your Digital
Services: Leveraging Big Data to Capture Value New models that
capture the value embedded in the data generated by digital
services may make it viable for companies to offer those services for
free. Research-Technology Management, 60(2), 43-52.