Netflix SWOT Analysis
SWOT is an acronym for strengths, weaknesses, opportunities and threats for organizations of all types. The following table illustrates Netflix SWOT analysis:
| Strengths
1. First mover advantage 2. Corporate culture 3. Original content 4. Global presence |
| Weaknesses
1. Dependence of business model on other companies 2. High level of indebtedness 3. Over-dependence on North American home market 4. Compromised customer service |
| Opportunities
1. Forming strategic partnerships 2. Product line extension 3. Benefiting from AI 4. Increasing focus on locally adapted content |
| Threats
1. Failure of new co-CEOs 2. Video piracy 3. Loss of customers due to rising prices 4. Global market saturation |
Strengths in Netflix SWOT Analysis
1. Although Netflix did not invent on-demand video streaming, it has proved that this business model can be viable. Netflix was the first company to scale video streaming globally and the company name has become synonym for subsection based on-demand media with huge content library. First mover advantage is a considerable strength for Netflix because it increases brand recognition considerably and establishes the company’s serves as industry standards.
2. Netflix is famous for its non-orthodox corporate culture. The entertainment services provider encourages decision-making by employees at all levels and shares information openly, broadly and deliberately. Moreover, internal communications at the largest streaming service in the world are candid and direct and this also relates to employee performance feedback. Sophisticated corporate culture established by co-founder and former long-term CEO Reed Hastings has played an integral role in the success of the company and it is one of the formidable strengths associated with the business.
3. Netflix was among the first streaming platforms to produce its own content starting from 2011. Over the years the entertainment services provider was able to produce critically acclaimed shows worldwide such as House of Cards (2011), BoJack Horseman (2020), Squid Game (2021), Kipo and The Age of Wonderbeasts (2020), Arecane (2021) and many others. Creativity, resources and experience required to produce such an effective programs is a noteworthy strength for the on-demand media provider.
4. Netflix enjoys a global presence with 231 million paid memberships in over 190 countries[1] and offices in over 25 countries[2] worldwide. In fact, China and Russia are only countries where Netflix is not available. Global presence offers tremendous advantages for the popular streaming platform in terms of achieving the economies of scale and learning about tastes and preferences of the local consumers in each market to be able to produce local original content.
Weaknesses in SWOT Analysis of Netflix
1. Netflix business model depends on a wide range of other companies in order to be able to operate effectively. All type of businesses depend on other companies, but for the streaming platform such a dependency is greater. For example, Netflix depends on AWS cloud services for hosting platform and it depends on large media companies such as Warner Bros., Dream Works and Sony Pictures for content licensing. As discussed, the largest streaming service in the world has its own library of original content, but this library is too small to break off the dependency of large media companies. Such an extensive dependency on third-party for operations makes the business vulnerable to a considerable extent.
2. The popular streaming platform has considerable debts. As of December 31, 2022, the company had approximately USD7.6 billion of total content liabilities. In Q2, 2023 reports Netflix reported the total debts of USD 14,46 billion. Considering its cash reserves of USD 7,83 billion, the net debt is about USD 6,63 billion. Netflix has a net debt of 1,2 times EBITDA which is high for a technology company. High level of indebtedness is a major weakness to achieve long-term growth for the business.
Netflix Inc. Report contains a full version of Netflix SWOT Analysis. The report illustrates the application of the major analytical strategic frameworks in business studies such as PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on Netflix. Moreover, the report contains analyses of Netflix leadership, organizational structure, business strategy and organizational culture. The report also comprises discussions of Netflix marketing strategy, ecosystem and addresses issues of corporate social responsibility.
[1] Annual Report (2022) Netflix Inc.
[2] ESG Report (2022) Netflix Inc.