Netflix is the world leading internet media-services provider operating in more than 190 countries with 148 million paid subscribers globally. In the first quarter of 2019, Netflix successfully added 1.74 million subscribers in the U.S and reached to 60.2 million paid subscribers.
Netflix launched the first online DVD rental and sales site with only 30 employees and 925 titles. After one year in 1999, it started subscription service that allowed customer unlimited DVD rentals for one monthly payment. In the year 2007, Netflix introduced video on demand streaming services that allowed customers to watch Tv shows and movies on their computers.
I recommend you to read PESTEL Analysis of Netflix.
- Name. Netflix Inc.
- Industry. Entertainment and Mass Media
- Founded. August 29, 1997
- Founder. Reed Hastings, Marc Randolph
- Headquarter. Los Gatos, California, U.S
- Area Served. Worldwide (Expect China, N. Korea, Syria)
- Revenue. US$15.794 billion (2018)
- Net Income. US$1.211 billion (2018)
- Employees. 7100 (2018)
- Website. www.netflix.com
Following is the SWOT Analysis of Netflix.
Rapid Growth. With unique business model, Netflix is attracting customer from the beginning. In the last 10 years Netflix revenue grown from 1.36 billion to 15.7 billion in 2018. If we look at Netflix subscribers, it has followed a similar trend and reached to 148 million in 2019 which was merely 21.6 million in 2011.
Original Content. One of the key strengths of Netflix is the high quality and original content. It has been producing its own original content since 2013. House of Cards was very first slate of original programming which increased the brand popularity and subscribers base. The viewers can binge-watch the series rather than one episode in a week.
No Commercials, No Pop-ups. Those viewers who watch television are always complaining about too many commercials or pop-ups when streaming videos. Ads-free environment is one of the major strength of Netflix and that is why viewers switch to Netflix to enjoy uninterrupted entertainment whenever and anywhere they want.
Global Presence and Customer Base. Netflix’s global presence is one of key success factors. It is operating in more than 190 countries. The company has a huge customer base of 148 million paid subscribers worldwide. These statistics show a strong position of Netflix in the streaming media industry.
Easy Access on Every platform. Netflix has an adaptable nature and viewers can watch it on Internet browser via PCs and Laptops. Netflix apps are available for mobile phones, tablets, digital media players and video game console.
Netflix spent over $526 million on marketing in the second-quarter of 2018
Copyright Issues. Netflix is maintaining impressive growth but most of the content viewers are watching is not owned by Netflix. It partners with different content providers, distributors and producers. But when, due to contractual obligation, the content is not available to stream, it negatively affects its reputation.
Original Content Cost. Netflix subscribers want to watch its original content but these tv shows and movies increase the cost for producing such content. In 2018, Netflix spent $12 billion on original content which was 35% up as compared to 2017 spending of $8.9 billion.
Debt. Netflix is producing original content since 2012. To keep its content library up to date and secure the rights Netflix needs money. Netflix is looking to raise more $2 billion in debt to fund its content to keep its subscriber base loyal. In the first quarter March 2019, Netflix total long term debt was $10.36 billion and total liabilities were $21.56 billion.
Environmental Issues. Another key weakness of Netflix is lack of initiative on environmental issues. Tech Giants Company like Amazon and Google have openly discussed about environment friendly plans. Netflix is facing immense pressure to go green.
Netflix pricing. Netflix needs money to keep its content library fresh and have decided to increase monthly subscription rates in the mid 2019 by $2 dollar. Pricing and affordability is always play an important role in the consumer buying behavior.
Strategic Alliances. Partnerships and strategic alliances are the key to Netflix growth. For example, Netflix is looking for partnership with cable providers around the globe which will positively affect its customer base. Netflix partnered with Hilton hotel chains that will give Hilton guests a better streaming experience.
Expansion. Netflix is no doubt an undisputed leader of video streaming industry with a huge subscribers’ base of 148 million in 190 countries. Netflix should tap into Chinese market which can increase its customer base to the next level. Other markets where Netflix is not operating include Crimea, North Korea and Syria.
Fresh Content for Everyone. Producing Fresh content or extending contracts with producers, distributors and content providers can create huge opportunity for Netflix. Keep refreshing the content on regular basis is also very important.
Fierce Competition. Though Netflix has strong hold in the entertainment industry still it is facing fierce competition from the big name like Amazon Prime, Hulu, HBO and Youtube. These platforms have their own type of contents providing to its subscribers.
Digital Piracy. Digital privacy is another threat to all content providers including Netflix. People find different torrents sites and many other ways to download movies and tv shows.