Netflix Business Strategy: an overview

Netflix business strategy is to continuously improve its members’ experience by offering compelling content that delights them and attracts new members. Netflix pioneered subscription streaming in 2007 and retains the first mover competitive advantage in this segment.

Moreover, the largest streaming service in the world is pursuing the following strategies:

1. Focusing on revenues maximization over membership growth. Internet-based technology companies such as Netflix often have to choose between growing members or revenues. On one hand, brand recognition at a broad scale requires scaling of the business. On the other hand, scaling requires massive financial investments at the same time when you cannot increase the cost. If you increase the cost, you cannot scale because people will not purchase. This is why internet-based companies such as Uber and Airbnb traded revenues for membership growth and stayed unprofitable for a long time.

For Netfix, on the other hand, membership growth is important, but revenue maximization per member is their primary concern. The on-demand media provider regularly increases prices. In the latest move it eliminated its cheapest USD 9,99 add-free plan for its US-based subscribers and  the cheapest ad-free tier for new members is because USD15.49 per month in summer 2023.[1]

2.Investing in original content. Netflix is the first company to invest in original content starting with award-winning House of Cards series in 2011. This was followed by a series of quality original content such as BoJack Horseman (2020), Squid Game (2021), Kipo and The Age of Wonderbeasts (2020), Arecane (2021) and many others. Quality original content is one of the main competitive advantages for the on-demand media provider.

3. Staying focused on movies, series and documentaries. Netflix stays within its niche of movies, series and documentaries and the company is planning to continue with this strategy for the foreseeable future. The largest streaming service in the world purposefully does not enter into news and live sports segments in order not to lose its brand identity.

Netflix Inc. Report contains the above analysis of Netflix business strategy. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, 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 and organizational culture. The report also comprises discussions of Netflix marketing strategy, ecosystem and addresses issues of corporate social responsibility.

[1] Schulz, B. (2023) “Netflix switches up pricing plans for 2023: Cheapest plan without ads now USD15.49” USA Today, Available at: https://www.usatoday.com/story/tech/2023/07/19/netflix-basic-ad-free-plan-gone/70433459007/