1.0 Executive summary
Netflix is a California-based internet streaming service with headquarters in Los Gatos. Hastings, the firm’s CEO, launched Netflix in 1997 (Sull and Turconi, 2021). Netflix’s main line of business is software renting online. Netflix offers a wide range of software goods and services via its software business services. DVD movies and various other software packages are included in this category. Despite the company’s initial poor performance, the imaginative entrepreneur changed it while recognizing and seizing new chances. In 2010, Netflix made its first move into the foreign market by extending its video-on-demand (VOD) offering to Canada after establishing its video-on-demand service and downscaling its DVD shipping service in 2007. After barely a decade, the streaming service has grown to over 200 million worldwide customers in over 190 countries. Netflix made its way to India in 2016 due to its massive population of more than one billion. The case study focuses on India and the strategic opportunities to get more subscribers. Netflix is among the leading entertainment platforms in India despite intense competition. Netflix has employed several strategies like Porter’s Generic Strategies to remain at the top and even conquer more countries.
2.0 Case Study Analysis
2.1 Netflix’s Overall Global strategy
Netflix’s overall global strategy has been successful so far due to the utilization of Porter’s Generic Strategies in its operations. Netflix has used a combination of Porter’s Generic Strategies in its business operations, contributing to its success. It is known for its affordable membership costs and extensive movies and TV shows that they either created themselves or leased from other production organizations. This is accomplished by first lowering manufacturing and sales expenses while maintaining high quality. Second, by presenting locally produced shows and improving technical components of their business, they may differentiate their content (Kumar, Gupta and Dixit, 2020). Finally, they are growing into other nations to acquire additional clients, concentrating on the European and American sectors. Netflix seems to be attempting to kill two or maybe three birds with one stone by focusing on cost leadership, specialized markets, and distinctiveness.
Besides, Netflix’s primary approach is cost leadership, and, as per Michael E. Porter’s model, it gives the company a competitive advantage by cutting costs and, in several instances (Afilipoaie, Iordache and Raats, 2021). This strategy helps the digital entertainment firm’s financial performance to remain competitive by concentrating on lower costs and the capability to offer low pricing without being the cheapest supplier. Netflix adopts a comprehensive approach to attract a more significant number of subscribers in the digital entertainment business instead of specialized marketing tactics that target specific market categories. Netflix exploits individuality in its operations, even though cost leadership is its key competitive advantage strategy. As a broad strategy, differentiation means expanding an online business and its products in approaches that set it apart from the competitors. Netflix, for example, improves its competitive advantage by producing its original content and streaming content from other parties. The general approach to differentiation aids the firm model in attracting and retaining customers, allowing for aggressive expansion goals for the internet operations’ continuous development.
Figure 1: Netflix’s Generic Strategies
Netflix has retained the top stop in the entertainment industry over the years because of its standardized strategy, which ensures that the marketing strategy has more competitive advantages. External forces such as Google, Amazon, Walmart, Apple, Google, Disney, HBO and other companies are well-adjusted by the firm’s profitability and nature. Netflix’s aggressive growth ambitions boost market success by confronting these external challenges. These development approaches adhere to the industry’s standard marketing approach and model, assuring operational efficiency and reaping the benefits of the package’s competitive advantages.
With over 193 million subscribers worldwide, Netflix has become a global brand. Netflix’s subscriber base has been dramatically growing in recent years. The company attracted over 10 million additional customers in the second phase of 2020 alone, as the epidemic increased people’s dependency on online entertainment. Netflix’s services are offered in 190 different countries. Its worldwide success may be attributed to the high quality of its content, a unique and improved viewing experience, and a revamped user interface. Netflix’s pricing strategy has also helped the company grow in popularity and revenue in other sectors. Aside from that, the accessibility of content in several local dialects has drawn subscribers worldwide.
Furthermore, Netflix has been successful due to its use of a business strategy that eliminates the middleman and introduces unlimited subscriptions (Gómez and Quevedo, 2018). By offering its original items directly to customers through its streaming network, the firm evades the need for brokers or intermediaries. This business model makes use of the firm’s strategic competencies and advantages. Other entertainment content suppliers may work directly with Netflix to reach specific audiences throughout the globe, allowing the firm to continue its rapid expansion. Netflix’s unlimited streaming service is a marketing technique that reflects the company’s broader business plan. Customers with unrestricted membership get unfettered access to entertainment material on the website. This business strategy aids in the acquisition and retention of members and the effectiveness of Netflix’s expansion ambitions.
2.2 Netflix India’s Strategy and its suitability
Netflix’s overseas subscribers outnumbered its domestic members by the second quarter of 2017(Sull and Turconi, 2021). However, the corporation saw not all overseas markets as equally significant. Growth in Internet connection, for example, was shown to be a leading predictor of future video-streaming audience in the company’s experience. Consequently, Netflix’s foreign expansion was gradual, with India being available only in 2016. When Netflix was first launched in India, it offered all of its original programs, a batch of Hollywood movies and television shows, and almost 100 Bollywood movies. India had a mobile subscription base of more than one billion people. The youth in India preferred to consume video material on cell phones rather than desktops or TVs due to poor broadband access and inadequate Internet infrastructure. However, Netflix has managed to thrive in India, thanks to some measures to attract more customers. Netflix India’s strategy is suitable since there has been a steady increase in the number of subscribers from India.
Netflix has prioritized content, which has proven to be a winning approach in India. The firm has successfully produced Hindi-language films, series, documentaries, and programming for Indian consumers. Tamil, Telugu, and Malayalam are among the South Indian languages featured in the new material. Also, for the first time in India, Netflix reduced the cost of its membership options. Netflix membership options are now at least ₹150 cheaper (Sull and Turconi, 2021). The discount is valid across all Netflix plans, including premium and mobile plans. In addition, Netflix is a massive success since they understand precisely what their customers want when they need it and the devices to use. Besides, Strategic agility is one of the primary reasons for the streaming service’s outstanding success. The capacity of Netflix to adapt to expand is a lesson for companies of all sizes.
The “Jio effect influenced Netflix’s decision to invest in India.” Jio Systems (a Reliance Industries business) introduced Jio 4G and broadband networks in late 2016, providing prices up to 75% cheaper, enabling millions of Indian users to get fast Internet for the first time and putting pressure on competitors to drop their charges (Khurana, 2021). In only six months, Reliance Jio grew to become India’s third-largest telecom carrier, with over 280 million consumers and a 24% market dominance. Because it became easy to access the Internet and the accessibility of cheaper smartphones, Internet operators in India began to utilize more digital entertainment (including films, music, television, and games), with an average of five hours a day.
The Ansoff matrix is a tool that firms may use to assist and advise them in making economic expansion decisions (Verhoef et al., 2019). The four strategic alternatives available in the Ansoff matrix are market development, market penetration, diversification, and product development. A firm must pick one of the four methods, or a mix of them, based on external and internal considerations.
Figure 2: Summary of Ansoff matrix
Thus, Netflix’s primary intense growth approach for increasing its processes and international market expansion is market penetration. This expansion plan involves selling more of the online firm’s streaming content in current markets. The objective of this growth strategy is to use Netflix’s general approach to gain and retain more clients in current areas to increase revenue and market share. Market Development aids Netflix’s organizational development, but only as a supplementary, high-volume growth approach. Market development is used to sell the company’s current internet streaming service and its original content to new markets. Product Development is a supplementary high-growth strategy that helps Netflix expand and develop. Besides, this growth strategy includes creating and selling new products in the company’s current markets. Because of the significant risks involved, diversification is seldom employed to grow Netflix’s operations. This ambitious growth strategy aims to extend the corporation’s operations past its current capabilities in online streaming and original content production.
2.3 Netflix India’s Strategy Vs Overall Global Strategy
Netflix has a well-structured international strategy in place, with a goal statement aimed primarily at end consumers. For one modest monthly charge, Netflix subscribers may watch more than they want, when they want, on almost any Internet-connected screen. Subscribers may stream without any advertisements, and they can play, pause, and recommence their viewing at any time. Netflix India’s strategy is similar to the overall global system, which has enabled the company to compete with other big entertainment companies. Besides, it might be challenging to choose the best strategy for your company to establish one. The first step is to pick a criterion for evaluating your options, and one excellent way of doing this is to look at their Suitability, Acceptability, and Feasibility (SAF) (Colbjrnsen, Hui, and Solstad, 2021). Netflix has employed SAF criteria in its strategic model worldwide.
The essential part of the SAF strategy model is suitability since the appropriateness of an option decides whether or not the approach will achieve the firm’s goals. Evaluating the return, risk, and shareholder responses that a specific plan creates is what the acceptability element is all about. Returns will be determined based on the benefits that stakeholders expect from the approach, which may or may not be financial, based on the shareholders’ choices. When it comes down to it, the SAF strategy model’s feasibility component decides if a strategy is effective or not. Since financial feasibility is established by performing a break-even analysis, predicting and evaluating cash flows and performing several other financial tests, it is vital to assess whether or not the organization has the aptitude, resources, and ability to implement the plan.
Furthermore, the Scaled Agile Framework (SAFe) is a group of institutional and workflow principles for installing agile methods at a large scale. The platform is a knowledge base that delivers systematic instruction on duties and roles, management and job planning, and upholding principles. Although it may seem that everyone in the software industry is adopting agile to enhance both quality and speed, the quick technique isn’t a one-size-fits-all solution. Even if a forward-thinking firm like Netflix needs a lot of cooperation and speed to satisfy consumer demand, agile isn’t the best solution (Renaudin, 2016). In the Netflix case, the company’s structure and engineering hiring practices make agile less desirable than you would think. Netflix consumes more than a third of the Internet’s bandwidth at peak times, yet the company is opposed to having a procedure. At Netflix, Agile has pockets, but applying the concept at scale is burdensome and contradictory given the organization’s structure.
Netflix uses multi-channel marketing to promote its content, including social media, print media, the Netflix website, YouTube, billboards, YouTube, and various other platforms. Netflix not only spends a lot of money on campaigns, but it also uses less expensive marketing strategies. So, make use of Netflix’s most effective marketing methods. In addition, Netflix employs hyper-personalization to foster consumer interactions. Netflix’s marketing approach incorporates guerilla marketing, a low-cost, non-traditional way of promoting a brand. Guerrilla marketing, on the other hand, yields significant results.
Nonetheless, Netflix has partnered with and responded to new markets. The group collaborated with major local corporations to build win-win relations. In other cases, it has formed partnerships with cable and phone providers to make its programs available via its existing VOD services. When Vodafone in Ireland began offering TV services to its customers, it added a Netflix button on its remote devices (Putri and Paksi, 2021). In Latin America and Spain, Netflix has established collaborations with Telefonica and KDDI in Japan.
Netflix had changed the blueprint for global entertainment when it first started expanding internationally in 2016. Netflix’s efforts in foreign movies and TV shows have resulted in large audiences throughout the globe for content from Spain, Brazil, Korea and India. Having conquered more than 190 countries, I think Netflix should now focus on North Korea, especially after the hit series named Squid Game which has been celebrated by many worldwide. It just took four weeks for “Squid Game” to be the most Netflix Inc. program in any language. But, in terms of Netflix’s worldwide goals, what occurred after that is even more critical since viewers like “Squid Game” began viewing more Korean series. Besides, Netflix is yet to capitalize on Pacific-Asian countries due to high competition. However, Netflix has the best executive producers from this region, which will play a significant role in penetrating these markets. Despite the numerous obstacles, Netflix executives should be confident that they can prosper by pursuing the Korean playbook. It includes hiring top executives with strong links to the local entertainment business, identifying cross-cultural content such as Japanese anime and Korean-language shows and enhancing local programming. With Netflix’s global strategy in place, I have faith that it can be the leading entertainment industry in the world.
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