Understanding Netflix’s Business Strategy: A Comprehensive Analysis

Introduction

Netflix has come a long way from its humble beginnings as an online DVD rental service to now being the world’s leading video streaming platform, with over 200 million subscribers in 190 countries. While its success may be attributed to its vast collection of content, its business strategy has played a crucial role in the company’s growth and profitability.

The Birth of Netflix’s Business Strategy

Netflix’s business strategy revolves around providing original content and licensing existing content at a competitive price, all the while prioritizing customer satisfaction and convenience. Its founders, Reed Hastings and Marc Randolph, envisaged this model when they founded Netflix in 1997. Initially, Netflix rented out DVDs through mail order to customers using a subscription-based service. Later, in 2007, the company launched its video streaming platform, which has since been its primary business.

Original Content Production

One of Netflix’s significant advantages over other streaming platforms is its ability to produce original content. By doing so, the company aims to create a loyal customer base while having exclusive control over the content, making it a unique offering compared to other platforms. Some of its original content, including House of Cards, Narcos, and Stranger Things, has garnered critical acclaim, resulting in high customer retention rates and attracting a diverse demographic.

Licensing and Streaming

Even though producing original content is expensive, Netflix primarily relies on licensing and streaming existing content to expand its library. The company has reportedly been spending a significant amount each year to acquire content licensing rights from networks and studios. By doing so, they have secured a vast collection of content covering different genres. An extensive library, coupled with personalized recommendations, has proved to be a significant driving force for customer acquisition and retention.

Customer Satisfaction and Convenience

Netflix has placed customer satisfaction at the forefront of its business strategy. The company has leveraged technology to offer personalized content and recommendations to its subscribers, providing them with a personalized experience. Moreover, it has made streaming convenient by offering a user-friendly platform that allows customers to watch content on any device, anywhere, and anytime seamlessly.

Conclusion

In conclusion, Netflix’s business strategy is centered around the production of original content, licensing and streaming existing content, prioritizing customer satisfaction and convenience. Its success is evident in its strong customer base and widespread popularity. While competitors such as Amazon Prime and Hulu have entered the streaming market, Netflix’s strategy has helped it stay ahead in the game and outperform its rivals. Netflix’s focus on providing excellent customer satisfaction, a vast content library, and a seamless streaming experience assures a bright future for the company.