Business Strategy: Analysis of Netflix's Pricing and Subscriber Impact

This report analyzes Netflix's business strategy, focusing on the impact of its pricing decisions on subscriber numbers. It begins with a summary of an article from The New York Times discussing Netflix's price increase and subsequent subscriber decline in the second quarter of 2019. The report then connects this real-world example to the broader concepts of business strategy, emphasizing the importance of effective decision-making and market analysis. It explores the factors contributing to Netflix's challenges, including competition from services like HBO Max, Disney Plus, and Apple TV Plus, as well as the loss of popular content rights. The report highlights the significance of pricing strategy within the overall business strategy framework and concludes by emphasizing the importance of adaptable strategies for sustained profitability. The document utilizes the article, 'After Netflix’s Prices Go Up, Its U.S. Subscribers Go Down' as a case study to understand the business strategy of Netflix.

RUNNING HEAD: BUSINESS STRATEGY
Business Strategy
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Contents
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Article Summary
 In relation to the article, ‘After Netflix’s Prices Go Up, Its U.S. Subscribers Go Down’
Netflix, an American media service was heavily affected by implementing a decision
taken in January, of enhancing the price of its service by 13% -18% for its subscribers. In
its digital service of 12 years, it was the first time the company had faced streaming
reduction in its paid users. Additionally, the second quarter lacks the fresh episode of two
major hits, ‘The Crown’ and ‘Stranger Things’. Both these causes had resulted in the
failure of meeting expected domestic demand in the second quarter of 2019 (Lee, 2019).
 It states that Netflix had failed in achieving the expected potential global subscribers. It
had added only 2.7 million subscribers in its second quarter. It was assessed that there
was a huge reduction in its subscribers as compared to first quarter of 2019. Moreover, it
led to the subsequent fall in its stock price (Lee, 2019).
 As per the article discussion, Netflix with global subscribers of 151 million predicts that
it will gain an addition of 7 million subscribers from the upcoming season of ‘Strange
Things’. Moreover, it claims to increase its domestic subscribers from 60 million to 90
million (Lee, 2019).
 Lastly, it poured light upon the major competitors of the Netflix. The top among them are
HBO Max, Disney Plus and Apple TV Plus. It states that Netflix will lose the North
American rights of ‘Friends’ and ‘The office’ as it had given the show rights to its
competitors (Lee, 2019).

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Figure 1: Stranger Things, a series from Netflix
Source: (Lee, 2019)
The article relies on the business strategy of the world-renowned and leading digital
media company, Netflix (Netflix, 2019). It includes the analysis of the result of the pricing
strategy adopted by the company in the second quarter of 2019. It is similar to the topic of
business strategy. Business strategy is the combination of decisions taken and action performed
to gain the business objective. It assists in determining the position of the business and its proper
development can help in better planning and gaining strength in the market (Campbell, Edgar, &
Stonehouse, 2011). However, poor and ineffective strategies can leads to profit loss and losing
control over the market share. In order to achieve goal, proper development of business strategy
is very essential for the business (Teece, 2010).
The selection of the article was based upon many factors. Firstly, it was about the
streaming online service company thus youth of the country is already familiar with it. Secondly,
it was a recent article of date 17 July 2019. Lastly, it focuses on the major issue of pricing
strategy and is relatable to the knowledge gained in the class. The article serves a great use as it
provides a general and practical example from the world regarding the importance of pricing

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strategy in the overall business profit. It guides us that even the top organization as Netflix can
be affected from its poor strategies. Lastly, it determines the significance of business strategy in
building profit.

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Bibliography
Campbell, D., Edgar, D., & Stonehouse, G. (2011). Business Strategy: An Introduction. London:
Macmillan International Higher Education.
Lee, E. (2019, 17 July). After Netflix’s Prices Go Up, Its U.S. Subscriptions Go Down. Retrieved
from The New York Times :
https://www.nytimes.com/2019/07/17/business/media/netflix-earnings-subscribers.html
Netflix. (2019, July 18). About Netflix. Retrieved from Netflix :
https://media.netflix.com/en/about-netflix
Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning,
43, 172-194.